State officials credit the improving economy for helping to increase Minnesota's projected budget surplus. The state is projected to have a $1.2 billion surplus in the current two-year budget cycle, up by more than $400 million from the previous forecast released in December.
"Our economy is certainly warmer than the weather," Minnesota Management and Budget Commissioner Jim Schowalter said.
The annual rate of job growth in Minnesota in 2013 slightly outpaced the nation's. Job gains were broad-based across industries. Minnesota's unemployment rate registered at 4.6 percent in December, the most recent month for which data were available. The nation's jobless rate was about two percentage points higher.
Minnesota's economic improvements translate to more tax dollars flowing into state coffers. Officials expect that pattern will continue.
"The story for Minnesota is continuing growth, continuing improvement," said the state's chief economist, Laura Kalambokidis.
Kalambokidis forecasts that employers will add on average about 3,500 jobs per month this year in Minnesota; that number is expected to pick up to over 5,200 a month by early 2015. And Kalambokidis expects wage income to grow by 5 percent in 2014, higher than the 3.5 percent growth rate of 2013.
The state and national economies are benefiting from the resolution of federal fiscal debates, which were creating economic uncertainty and hampering the recovery, Kalambokidis said.
"The release of that policy uncertainty, together with the reduction in fiscal constraints, contribute to an increase in consumer confidence," said Kalambokidis.
But Kalambokidis said some headwinds may persist.
As the Federal Reserve scales back its bond-buying economic stimulus, the recovery could lag. The softness in economic indicators that many economists are currently attributing to bad weather could turn out to be more than temporary.
Weakness in the global economy could hurt U.S. and Minnesota exports. And laws governing finance and health care go into effect this year, the economic effects of which are unknown.