Just like the rest of the nation, Minnesota's economic signals are all over the place.
The red-hot housing market in the Twin Cities is beginning to cool, but prices in the region are still going up, and they hit another record last month.
Minnesota had basically flat job growth in June after seeing sizeable gains in prior months. At the same time, the state's 1.8% unemployment rate is not only the lowest in the nation, but the lowest ever recorded in the U.S.
"When you consider that we have the lowest all-time unemployment rate on record among any state last month, it's hard to say there's any signs of a recession in the labor market," said Oriane Casale, leader of the labor market information office at the Minnesota Department of Employment and Economic Development (DEED).
Consumer spending is still up, though there are some indications of a pullback. Minnesota-based retailers Target and Best Buy have warned in recent weeks that sales and profits will come in lower than expected as consumers shift their purchases.
If this picture all adds up to a recession, most economists agree it would be a very strange one.
"What we see out of the last quarter or two is a lot of mixed signals," said Sean O'Neil, director of economic development and research at the Minnesota Chamber of Commerce. "We're in a period of flux."
It will be months before the official arbiters of a recession in the U.S. — a panel of academics — decide if we're officially in one. But new data released Thursday showed that the U.S. has met the rule-of-thumb description of a recession, which is two consecutive quarters of declining economic growth.
Minnesota and the U.S. both saw declines in their gross domestic product in the first quarter of this year — 2% for the state and 1.6% nationwide. In the second quarter, initial estimates Thursday showed that U.S. GDP had dropped another 0.9%, fueling more speculation and questions about whether the country is now in a recession.
The second-quarter GDP figures for Minnesota won't come out until the end of September.
Many economists and officials, including Federal Reserve Chair Jerome Powell, have said they don't believe the economy is in a recession yet because other indicators, such as the labor market, remain quite strong.
Laura Kalambokidis, the state economist for Minnesota, said that most recessions are characterized by significant job losses, which neither the U.S. or Minnesota have seen.
"The fact that unemployment is so low is inconsistent with the idea of a recession," she said.
But the risk of the U.S. moving into a recession has risen over the course of the year, especially as the Federal Reserve has raised interest rates, including another triple-sized increase this week, in an effort to cool off high inflation.
If a recession does materialize, Kalambokidis said Minnesota is in a good place to weather that storm given its low unemployment rate and record high number of job openings.
"The state is well positioned to move into slower economic growth because the employers are in good shape to absorb any workers that either enter the labor market to look for work or who may lose their jobs as the economy slows," she said.
She added that state finances are also strong with full budget reserves and a predicted surplus.
Kyle O'Keefe, Twin Cities district president for recruiting firm Robert Half, said he's not yet seen any drops in hiring demand with local employers still eager to staff up.
"It continues to be a pretty robust environment," he said. "There is such pent-up demand that I don't see a slowdown."
His firm's recent surveys have shown an uptick, however, in workers expressing concern about losing their jobs, he added.
O'Neil, with the Minnesota Chamber of Commerce, said he also hasn't discerned any shift in the tone of companies when it comes to staffing up.
"The companies I've visited with are still trying to hire," he said. "They still have unfilled job openings. They continue to say their biggest challenge is trying to find workers."
The state's flat job growth last month seems to have been mostly driven by the workforce shortage, O'Neil said. "Those tight labor markets are slowing down job recovery," he said, adding that Minnesota has been lagging the nation's job recovery.
The "r" word — recession — didn't come up at a DEED roundtable with business leaders on Thursday held in Twin Ignition's startup garage in northeast Minneapolis. The topic of conversation was about how to support business and economic growth in the state.
DEED Commissioner Steve Grove said the state's labor shortage is holding back growth. "If we don't have enough workers to produce the goods and services that Minnesota has, then we're not going to be able to grow our economy," he said.
Also of concern is the high Black unemployment rate in the state, which rose last month to 7.4% and is more than double that of the white unemployment rate in the state. "Disparities are one of our economic Achilles' heel right now," Grove said.