Greetings all. Last Thursday, I had the opportunity to sit in on the Federal Reserve’s latest report on Regional Economic Conditions in the Ninth District. The survey was conducted in late July and reflects a snapshot rather than a scientifically sampled survey.
 
The quick takeaways:

• The most recent 3-month period saw solid revenue growth among reporting firms;
• There were notable differences in responses based on firms’ size and ownership;
• Workforce growth was notably slow among all firms but less so among larger firms, and that matters;
• Wage growth was moderate overall, but stronger growth at larger firms;
• Firms face significant challenges but (for the moment, at least) not directly COVID-related; and 
• Overall outlook is quite optimistic across all firm sizes, the first time we are seeing net positive numbers across all firm sizes (note: results precede the recent increase in Delta variant cases).

 
Ron Wirtz, the Fed’s Regional Outreach Director, spent a lot of time breaking out this idea that, regarding workforce and wages, “not all firms are created equal.” Large firms have an outsized impact on activity. Firms of 10 employees or fewer represent about 75% of all firms; their share of employment is 10%. Large firms are a tiny share of all firms, but they represent over 40% of all employees. The large firms are experiencing strong growth, so overall numbers reflect that. The smallest companies, certain sectors, and the minority- and women-owned firms are net positive but still lagging.  The top 3 challenges companies are facing? Supply chain disruptions, labor availability, and price increases.
 
What are national surveys telling us? Gallup’s latest Economic Confidence Index: reflects a dip in U.S. economic confidence as more say the economy is worsening. Alignable’s August Rent Poll Report: overall, 5% improvement in the number of small businesses that were able to pay their rent this month. This is the first time in 6 months where there was such a positive lift. That said, still 30% could not pay their rent on time or in full, and that number is 45% for restaurants (up from 40% in July).
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Regarding downtown Saint Paul, the Downtown Alliance has scheduled a virtual event this Thursday at noon bring together a whole host of public and private sector partners about what to expect in downtown as workers and visitors continue to return.
 
See you in the trenches.
B

The number of Minnesotans hospitalized with COVID-19 has more than doubled in August, which includes transfers in from other states, contributing to a tightening supply of available beds across the state – the greatest shortage, however, is highly trained staff. 
 
Last week’s update from MDH re how the Delta variant is impacting those who are vaccinated:

• About 3.5x the protection compared to the unvaccinated.
• If you get breakthrough case, capacity to spread is still possible.
• If vaccinated, 8x the protection from symptoms.

• If vaccinated, 25x the protection of getting severe disease, placing you in hospital.

Feds recently made announcements re vaccines, a "third dose": for the immuno compromised, organ recipients, and those on chemotherapy
For the rest of us, a "booster" at about 8 mths after the 2-shot series.

​​COVID-19 vaccines: The Biden administration is reportedly expected to soon approve COVID-19 vaccination booster shots at six months after people receive their original doses rather than eight months, the timeframe it had previously announced. Regulators also are reportedly expected to approve boosters for the Pfizer Inc.-BioNTech SE, Moderna Inc. and Johnson & Johnson shots by mid-September. 

5 Ways to be a Change Leader: find out what that means, and learn about some effective habits you can implement as well – one at a time.  ​

​So, what did we learn from our survey last week? We asked you about your timing for return to office. Responses remain fairly mixed. As I talk with business leaders, the one sense I’m getting is that larger companies are delaying, smaller companies are coming back sooner (or already back in the office). Across all company sizes, hybrid approach to “return to office” is the generally agreed-upon approach moving forward.  
 
Of the respondents, we had an equal mix from companies across all sizes.  Unfortunately, we were not able to assign responses to company sizes.
 
44% of respondents are back in office already (or are “essential” and never left)
7% are targeting September
20% are targeting October
26% are undetermined at this time
 
And are you tracking – or even requiring - vaccinations for your employees? A running list of Minnesota employers requiring COVID-19 vaccines for employees. And, yes, you could face legal consequences for lying about your vaccination status.
 
See you in the trenches.
B

​​Monetary policy: Federal Reserve Chairman Jerome Powell will speak at the Kansas City Fed’s annual symposium on Aug 27. Why it's worth watching: Chair Powell will deliver remarks at the conference. The theme this year is "​Macroeconomic Policy in an Uneven Economy," a timely topic given the uneven economic recovery from the country's coronavirus lockdown. 
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Minneapolis Fed President Neel Kashkari on the labor market: continues to be tight but there are signs it’s starting to stabilize. And what’s next? 

Minnesota saw solid job growth in July, adding 14,500 jobs. State’s seasonally adjusted unemployment rate now dropped to 3.9% (5.4% nationally). And U.S. jobless claims hit new pandemic low. 

​Consumer spending numbers are due out Friday. Why it's worth watching: Consumer spending grew 1% last month, but the delta variant could change how often people are comfortable returning to pre-pandemic habits. For the next several months, economists will be watching consumer spending figures, along with other indicators, to see if the economy continues to improve or if it starts to falter. 
 
Events and meeting industry is facing new headwinds with the Delta variant – though both the industry and the airlines are still ahead of where they were 5 months ago.  

​What is manufacturing telling us this month? Orders are up 17% year-over-year; in June, 17 of the 18 manufacturing industries reported growth. The Purchasing Managers Index (PMI) for July was 58.4. Strong, certainly a positive indicator of growth, but not quite “humming along,” constrained by supply chain disruptions and labor shortages. 

​Prime Therapeutics just pushed their return to office until January 2, 2022. 

Planning for the Hillcrest golf course redevelopment project calls for 1000 units of housing and 1000 jobs. This week the Saint Paul Port Authority announced the site is aiming to be carbon neutral as well. The vision is for the Hillcrest site to be the nation's first made-from-scratch, carbon-neutral, mixed-use development. Many renewable energy solutions are expected to be deployed, including rooftop solar arrays, a geothermal heating and cooling network, energy-efficiency and electric vehicle charging stations, planners at the St. Paul Port Authority, 

Federal: House Democratic leaders are set to move forward with a vote on President Joe Biden's $3.5 trillion budget despite pushback from moderates to consider a rule that would allow the chamber to simultaneously consider both the budget resolution, which includes the party's social spending proposals, and the bipartisan, Senate-passed infrastructure package. The plan - a move to mollify moderates calling for passage of the physical infrastructure spending first - would be to vote this week on the budget resolution to kick-start social spending negotiations and come back to the roads and bridges later. 
 
Local:

• Last week Saint Paul’s City Council voted to eliminate parking minimums citywide and approve the development proposal at 695 Grand Ave. Both decisions recognize the need for continued investment and adding density in our growing city.
• Zoning relief sought for 3 projects at Saint Paul’s Highland Bridge.  Board of Zoning Appeals meets today to consider. Two projects are related to proposed affordable housing, the third is related to a medical office building.

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Read more updates in our weekly Chamber Advocacy Update.​

How to serve the “unbanked” and “underbanked”? It turns out these are very different groups, with diverging needs and priorities. And the banking industry is focused on how better to serve both.
 
This region’s bank giants encouraged – and now welcomes – First Independence Bank, a Black-owned bank from Detroit, into this market.
 
This ranking lists “Minneapolis” as #2 best Midwest city for startups. I consider this a celebration for the entire region, since examples given are from across the metro. ​