MINNEAPOLIS (WCCO) -- Minnesota Gov. Tim Walz says the state's economy will be stressed due to the coronavirus (COVID-19) pandemic and that a U.S. recession is expected.
On Monday, Walz gave an update on the changing economic conditions amid COVID-19. Due to the virus outbreak, Walz said that the state's macroeconomic consultant, IHS, took the unusual step of updating its U.S. economic outlook between scheduled forecast releases.
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In its new forecast, IHS now expects a U.S. recession beginning in the second quarter of this year and continuing until the end of the year. Recovery is expected to begin in the first quarter of 2021.
"This announcement confirms what we have suspected: deteriorating economic conditions caused by COVID-19 will stress Minnesota's economy," Walz said. "Doing the right thing to protect ourselves and one another—social distancing—is hard on our economy in the short run, but it will ultimately be the right thing for all of us. In these times of uncertainty, my Administration is working tirelessly to ensure our state is in the best position possible to weather whatever may come our way."
The forecast is expected to evolve in response to incoming economic data and policy responses. Uncertainty is "extraordinarily high" about the size and duration of COVID-19's negative impact on economic growth.
"Prior to the COVID-19 outbreak, Minnesota's economic fundamentals were strong: unemployment was low and demand for workers was high," said State Economist Dr. Laura Kalambokidis. "We have a diverse industry base; some of the most well-known, innovative companies in the world; an effective and resourceful non-profit sector; and a talented, hard-working workforce. Minnesota's economy is not immune to a U.S. recession, but flattening the curve of COVID-19 infections will help us get back on our feet and back to work as soon as possible."
Minnesota Management and Budget will be releasing its quarterly Revenue and Economic Update on April 10. State officials say the report will explain the changes in the U.S. economic outlook and give updates on Minnesota's tax receipts.
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