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Twin Cities inflation rate among lowest in the country
Minneapolis-St. Paul became the first major metro area in the U.S. to reach the Fed’s inflation goal this spring, but leaders say it’s no time to get complacent.
MINNEAPOLIS — At a symposium in Jackson Hole, Wyo., on Friday, Federal Reserve Chair Jerome Powell hinted at further interest rate increases by the end of the calendar year, in order to cool inflation that he says “remains too high.”
After hitting a peak of 9.1% in June 2022, the nationwide inflation rate as calculated by the Consumer Price Index decreased to 3.2% as of July 2023.
“It is the Fed’s job to bring inflation down to our 2% goal,” Powell said Friday, “and we will do so.”
By that measure, the Twin Cities are ahead of the curve. Back in May, the Minneapolis-Saint Paul region became the first major metro area in the U.S. to accomplish the 2% goal, registering an inflation rate of 1.8%. That figure, as of July, has since fallen to just 1%, meaning inflation here is lower than basically anywhere else in the entire country.
What’s behind that 1% inflation rate, exactly?
Ron Feldman, the Chief Operating Officer and First Vice President at the Federal Reserve Bank of Minneapolis, attributed some of the progress to housing. An acceleration in construction across the Twin Cities, he said, is helping to drive down housing costs — which make up a large portion of the Consumer Price Index.
“We are building lots and lots of housing. If you drive around the Twin Cities, you see cranes, you see new buildings going up,” said Feldman, who also separately co-chairs the housing task force for the Itasca Project. “So that’s part of the story. And part of the story is that in other areas, they are not building as much and more people are moving there, so their housing prices are growing faster.”
According to data tracked by the Itasca Project, the seven-county metro area built 21,673 new housing units in 2022, surpassing the group’s goal of 18,000 for the fourth year in a row. Overall, the Twin Cities are on track to meet the Itasca Project’s 2030 target, which could help the region rebound from the Great Recession’s housing plunge.
“It’s all kind of linked. Housing in Edina affects housing in Minneapolis which affects housing in St. Paul,” Feldman said. “It’s one big market.”
In Minneapolis specifically, Mayor Jacob Frey said the city built 919 units of deeply affordable last year, the most in history.
According to research by Pew — which was cited by the national media in a Bloomberg article earlier this month — rents in Minneapolis have increased by only 1% since 2017, compared to a national average of 31%.
“We set a tone of increasing the supply of housing in the city of Minneapolis,” Frey said in an interview. “The investments we’ve made in housing have clearly helped us tackle inflation more so than any other city in the country.”
However, in an op-ed published this week, Feldman and fellow Minneapolis Fed Senior Vice President Alene Tchourumoff cautioned against falling into a “false sense of complacency” on inflation.
“Filling out this story, a number of observers tied this low inflation rate to a local housing market producing housing at a high rate, which naturally gives us a sense of pride. Is that sense of accomplishment deserved? Yes and no,” they wrote. “We agree that housing production should be the focus today and in the future, but it’s way too soon to declare victory.”
As Feldman and Tchourumoff noted in the op-ed, the Twin Cities are “not outperforming our peers” in terms of housing production.
According to the Itasca Project’s dashboard, Minneapolis-Saint Paul produced 6.7 new housing units per 1,000 people in 2022 — higher than cities like Seattle, Portland, Boston, San Francisco, Chicago and Pittsburgh, but far lower than places like Austin, Charlotte and Dallas.
“The housing market isn’t free from what government policy is. It’d be great for the state, and localities, to take policy actions that make it easier to build more housing,” Feldman said in an interview this week, “The bottom line is, if we don’t have more then in the long run, housing prices are going to be higher than they would be otherwise.”
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The newly elected board unanimously accepted it during a special board meeting Thursday night.
BURNSVILLE, Minn — STEP Academy officials said the school is taking steps to pay off its debt after letting go teachers, administrators, and people who worked in operations to balance their budget.
“We’re very sad we had to reduce our budget based on our enrollment but that was a necessary step so that we could stay financially secure,” said Paul Scanlon, STEP Academy’s chief operations officer.
Scanlon corrected a statement made by the St. Paul charter school’s finance director on Monday who said the school has an operating budget deficit of $2.1 million.
“It’s projected by the end of the year that it will roughly – 2.1% of our overall budget. It’s not 2.1 thousand or 2.1 million,” Scanlon said.
He said that’s roughly $275,000, which is how much debt the charter school will have by the end of the academic year.
“Through careful financing, we’ve been able to pay off some of our debt and get that number lower and lower,” he said.
Scanlon said under the Minnesota Department of Education, a school must be at least -2.5% to be considered in statutory operational debt.
The newly elected board started on Monday. Scanlon said there was some confusion about their appointment, but he said the plan was to seat them at their annual meeting on Oct. 21. He said all of the new board members were elected to their positions.
“Candidates nominated or being nominated for the positions to expand the expertise and size our of board took several weeks of getting the nominations and having ballots prepared,” he said.
The board unanimously voted to accept Superintendent Mustafa Ibrahim’s resignation. He said his last day will be Nov. 4. In his letter, he said “my time leading STEP Academy has been the most rewarding period of my career.”
Scanlon said they will not be looking for an immediate replacement.
“At this time based on our finances, based on the strength that we’re seeing from our two principals on both sites, we feel like we can cover many of those components and then we would look to post for the 25-26 school year,” he said.
The board also approved an Ad Hoc committee’s report on the job description of the superintendent of educational services for when they do hire someone for that role.
The board unanimously voted to postpone filling two school board vacancies until they have appointed a chair, vice chair, secretary, and treasurer. They’ll discuss it again at their next meeting, and possibly decide how they want to fill those seats.
“We’re 50 ahead of where we were, 50 deaths,” Mike Hanson said. “50 families who have lost a loved one more than we were at this time last year.”
MINNEAPOLIS — It’s a frustrating trend for Mike Hanson, director of the Office of Traffic Safety within the Minnesota Department of Public Safety.
“Anytime I see an incident like the one that took place last night, I’m angry,” Hanson said. “It’s really hard to put into words, because this is exactly the type of thing that we work to prevent.”
Wednesday night, a 29-year-old man from St. Paul exited eastbound I-94 onto Lyndale Avenue in Minneapolis. The crash report says that man was traveling at a “high rate of speed.” That man hit several cars, killing a 26-year-old Minneapolis woman and injuring several others.
“That is the one thing that makes every bad decision worse, because speed brings energy, and energy is what results in injury and death,” Hanson said.
Data provided by DPS shows that there have been nearly 150 accidents in and near the area where this happened since January 2021. Some don’t involve alcohol, some do. Hanson said it’s their goal to make sure alcohol is never a factor.
“There is literally no excuse today for somebody to wind up in the back seat of a squad car, an ambulance or heaven forbid a hearse, because of an impaired driving decision,” he said.
Unfortunately, data shows that fatal accidents are up in Minnesota so far this year.
“We’re 50 ahead of where we were, 50 deaths,” Hanson said. “50 families who have lost a loved one more than we were at this time last year.”
Hanson said they work with different agencies across the state to help assist with education and prevention before anyone gets behind the wheel impaired.
“Our basic message is impaired is impaired. It doesn’t matter what it is that you’re impaired by, if you feel different, you will drive different,” he said. “And if you’re sitting behind the wheel and you have to ask yourself should I drive? It’s already too late.”
Police said the suspect in an alleged armed burglary is described similarly to someone who was reportedly looking into windows in the city earlier the same day.
BROOKLYN PARK, Minn. — Police in Brooklyn Park are urging residents to make sure their windows and doors are locked after an alleged armed burglary in the city on Thursday.
According to police, residents on the 1700 block of 73rd Ave N. were coming home around 7:30 p.m. when they discovered a man in their home. The man pointed a gun at them and then fled, officials said.
The suspect is described by law enforcement as Black, 5’9 or 5’10, a skinny build, with a beard. He was reportedly wearing a black hoodie and pants.
Police said a man with a similar description was reportedly looking into windows and trying door handles around the 7500 block of Newton Ave N and Meadowwood Drive earlier on Thursday. In that case, the suspect was wearing a black hoodie with white lettering, a black coat with red sleeves, and light-colored pants, officials said.
“In light of these incidents, Brooklyn Park Police are urging residents in the area to ensure that all windows and doors are securely locked,” an alert from police said, adding if anyone notices “suspicious activity” they should call 911.
Brooklyn Center Police had similar sightings as well, according to law enforcement.
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