For Minnesota’s retailers, federal conformity of PPP loans (a MnRA priority) and unemployment conformity were big session accomplishments, along with keeping a long list of workplace and product mandates and requirements at bay.

MnRA was pleased to work with and for retailers at the Capitol for the 2021 legislative session, and also counts changes to June accelerated tax payments, support for businesses recovering from the pandemic and unrest and an increase in pharmacy reimbursement among top positive session outcomes.

While the outcomes of the session on workers, retailers, key business partners and communities were generally positive, many retail priorities were left for future conversations, including updating Minnesota’s outdated alcohol laws, modernizing our organized retail crime statutes, allowing retailers to keep a small amount of sales tax collections to offset costs, and expanding the efficient and meaningful connection between pharmacists and patients.

The Federal Reserve Bank of Minneapolis is tracking the economic recovery among businesses across the Ninth District, a region that includes Minnesota, the Dakotas, Montana, parts of Wisconsin, and Michigan's Upper Peninsula. We are partnering with state and local chambers of commerce, economic development associations, and other business groups in each state to collect your feedback.

Please take this 5-minute survey to help the Minneapolis Fed and President Neel Kashkari better understand effects on your firm. We’ve also shortened and streamlined this survey so that you can offer feedback more quickly. With other business voices from across the Ninth District, your input will help the Federal Reserve System shape monetary policy to help businesses thrive. If you get this survey from multiple sources, please respond to the survey only once.

Consumers plan to spend record amounts for both school and college supplies as families and students plan to return to in-person classrooms this fall, according to the annual survey released today by the National Retail Federation and Prosper Insights & Analytics.

“The pandemic forced parents and their school-aged children to quickly adapt to virtual learning, and they did it with an incredible amount of resolve and flexibility,” NRF President and CEO Matthew Shay said. “We enter the new school year with plans to return to the classroom and retailers are prepared to help Americans find and purchase whatever they need to make this transition as seamless as possible.”

Families with children in elementary through high school plan to spend an average of $848.90 on school items, which is $59 more than last year. Total back-to-school spending is expected to reach a record $37.1 billion, up from $33.9 billion last year and an all-time high in the survey's history. College students and their families plan to spend an average of $1,200.32 on college or university items, an increase of $141 over last year. Over half ($80) of this increase is due to increased spending on electronics and dorm furnishings. Total back-to-college spending is expected to reach a record $71 billion, up from $67.7 billion in 2020.

According to the survey, as of early July more than half (51 percent) of K-12 and college shoppers have begun shopping for the items they will need when classes resume later this year. And 39 percent say they took advantage of recent sale events such as Prime Day, Target Deal Days and Walmart's Deals for Days to shop specifically for school items.

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Minnesota’s seasonally adjusted unemployment rate remained steady at 4.0% in June and the state’s labor force participation rate also remained level at 67.9%, according to numbers released today by the Minnesota Department of Employment and Economic Development (DEED). Nationally, the unemployment rate rose one-tenth of a percentage point in June to 5.9% with labor force participation holding steady at 61.6%.

Over the month, Minnesota lost 600 jobs on a seasonally adjusted basis. The private sector lost 3,100 jobs, down 0.1%. These losses are the first since December 2020 in Minnesota. Growth has been uneven from month to month coming out of the pandemic recession. Translating seasonally adjusted job change into a 3-month moving average series, which helps level out this unevenness, Minnesota added 15,400 jobs, up 0.6%, in Feb-April; 14,267, up 0.5%, in March-May; and 7,267, up 0.3%, in April-June, a strong growth pattern. Nationally, this compares to 0.4% growth in each of these three periods.

A pandemic like no other produced a recession like no other, and economists continue to have trouble projecting the fallout from COVID-19 on the national and state economies.

Further evidence of how the novel coronavirus was not kind to the dismal science came Monday in the latest revenue and economic update from Minnesota Management and Budget, which shows state tax collections continuing to soar over predictions. In the five months since the official February forecast — the document used by the Legislature to build the current state budget — tax revenues came in $2.684 billion higher than expected.

That’s 11.2 percent more than the February forecast, a document that already showed a big improvement over the previous November’s forecast, which itself was a massive improvement over the May 2020 forecast. In a little over a year, the state’s financial position has shifted from a deep budget deficit to a sizable surplus — a trajectory that followed a record collapse in the national economy and then a record recovery.

In just the last three months of the 2020-21 two-year state budget — April, May and June — collections were 28.7 percent, or $2.12 billion, more than was expected in February. Some of that money reflects an improved 2020, which came in via the individual income tax that wasn’t fully collected until May. But other increased tax dollars are from 2021 economic activity.

The better-than-expected revenue collections showed up in all of the state’s major taxes. The individual income tax was up 12.4 percent from what the February forecast projected. The general sales tax was up 5.5 percent from forecast. And net corporate tax receipts were 38.4 percent higher than expected.

Prices for U.S. consumers jumped in June by the most in 13 years, evidence that a swift rebound in spending has run up against widespread supply shortages that have escalated the costs of many goods and services.

Tuesday's report from the Labor Department showed that consumer prices in June rose 0.9% from May and 5.4% over the past year — the sharpest 12-month inflation spike since August 2008. Excluding volatile oil and gas prices, so-called core inflation rose 4.5% in the past year, the largest increase since November 1991.

The pickup in inflation, which has coincided with the economy's rapid recovery from the pandemic recession, will likely intensify a debate at the Federal Reserve and between the Biden administration and congressional Republicans about how persistent the accelerating price increases will prove to be.

The Fed and the White House have made clear their belief that the current bout of inflation will prove temporary. As supply chain bottlenecks are resolved and the economy returns to normal, they suggest, the price spikes for such items as used cars, hotel rooms and clothing will fade. Some economists, along with Wall Street investors, have indicated that they agree.

"The headline inflation numbers have been eye-popping in recent months, but underlying inflation remains under control," said Gus Faucher, an economist at PNC Financial Services. "Once again a few categories — used vehicles, airfares, rental cars, hotels — are experiencing huge price gains because of the recovery from the pandemic."

Still, continued higher inflation does raise the prospect that the Fed could decide to act earlier than expected to pull back on its ultra-low interest rate policies, which have been intended to support more borrowing and spending. If so, that would risk weakening the economy and potentially derailing the recovery.

For now, price increases are running ahead of the wage gains that have kicked in this year, which means the financial burdens on millions of households have grown more difficult. Average hourly earnings increased 3.6% in June compared with a year earlier, normally a solid gain, but far less than current inflation.

Every month, the U.S. Department of Commerce, Census Bureau, releases its first calculation of the previous month’s retail sales. At Retail Dive, we report these figures by grouping the key segments that define “retail” in a way that we hope is most meaningful to the industry.

We use unadjusted, advance numbers and year-over-year comparisons, with the government’s most recent revisions to its year-ago estimates. And although we of course include e-commerce, captured in the federal report as “nonstore retailers,” readers will note that the government includes sales from businesses not generally thought of as “e-commerce.”

In June, retail sales among a cohort of segments tracked by Retail Dive rose 14.3% year over year and 26.8% from 2019, according to numbers released by the U.S. Department of Commerce Friday. E-commerce grew 6% year over year and 44% from 2019.

The level of increases across sectors surprised many analysts, especially those predicting that consumers would shift their spending to services — as they began to enjoy summertime with nearly all pandemic restrictions eased, just as their financial cushion from federal pandemic relief shrinks.

Some of that shift did occur, and a bit of the growth was actually due to inflation, according to Wells Fargo economists Tim Quinlan and Shannon Seery. But that didn’t stop shoppers from acquiring things, including, in a nice twist for retailers selling apparel, things to wear.

“As people get back to working in offices or just going out to see friends, many apparently needed to find stuff that fits,” the economists said in their report Friday, noting month-over-month gains in apparel and at general merchandise stores, which also sell clothing.

Department store sales, which depend heavily on apparel, also benefited from the enthusiasm for new clothes, rising 28.9% year over year and 6.5% compared to 2019. But that struggling segment’s recovery could be short-lived, according to GlobalData Managing Director Neil Saunders.