The economic downturn will last well into next year, and while credit is “widely available” to businesses in its district, lenders have raised standards for the diminished number of applicants, according to the Federal Reserve Bank of Minneapolis, which released its 2009 outlook yesterday.
“The outlook for local economies is dismal across most of the district, the worst in the 18-year history of the business leaders poll,” the bank said. Expectations are for widespread declines in business investment, employment, and consumer spending.
“The pessimism is strongest in Minnesota and Wisconsin. While economic conditions have slowed in Montana and the Dakotas, these areas are faring better, in large part, thanks to a relatively strong agriculture sector,” the survey said. “Businesses and consumers are also seeking less credit, and those that do are less qualified to receive it.”
“All signs point to declining regional economic activity in 2009,” said Toby Madden, regional economist at the Minneapolis Fed. The bank sees fewer employees and higher unemployment rates as the home building and residential real estate markets recovery “may be more than a year away.”
Inflation worries have dissipated with the decrease in energy and commodity.
Agricultural producers are concerned about profitability in 2009, while manufacturers noted a slowdown in 2008, and they expect it to continue in 2009.
The annual forecast includes information from the Minneapolis Fed’s statistical forecasting models, along with results from annual surveys of business leaders, manufacturers, and agricultural lenders in the district.