As 2026 begins, Minnesotans offer mixed takes on the economy
A few days before he ushered in the New Year, Duncan Alexander sat surrounded by five dogs living in the creaky 19th-century house he calls home, pondering his future.It’s been a while since he’s felt any control over his financial future. As a kid, he had once daydreamed of working hard at a job and saving enough money to buy his own home. But today, at 34, he’s still living in his childhood home in Hendrum, and the dreams he once had as a child are now gone.“I (feel) trapped on a train,” Alexander said. “It’s going somewhere. I don’t know exactly where it’s going, but I also can’t get off the train, so I just have to hope for the best.”A sign welcomes visitors into the local community of Hendrum, Minn., on Dec. 29, 2025.Tadeo Ruiz Sandoval | MPR NewsAlexander drives a half-hour south every day to Fargo, where he works as a house cleaner. He’s dependent on clients who can afford his $40-an-hour services, a price he raised by $10 from what he charged customers two to three years ago.“Due to inflation, we had to increase our prices, and due to the price increase,” Alexander said, “(some of our clients) just weren’t able to afford it anymore, and had to stop because of that specifically.”Alexander likely lost some of his business because consumers were much more cautious in 2025. It’s a trend that Erick Garcia Luna, a regional economist at the Federal Reserve Bank of Minneapolis, has noticed.“In general, consumers are facing some pressures,” Garcia Luna said. “(You have) persistent inflation, now you have also a cooling labor market and slower wage growth.”Duncan Alexander’s home, RV and tractor sit nestled in the middle of Hendrum, Minn., on Monday, Dec. 29, 2025.Tadeo Ruiz Sandoval | MPR NewsAnd yet despite factors that usually signal a downturn, the economy has continued to grow, Garcia Luna said. The latest GDP estimate shows the economy grew at an annualized rate of about 4.3 percent in the third quarter of 2025. And most of that growth comes from consumer spending, which, in nominal terms, increased 5.2 percent year over year. “It kind of makes you imagine that everyone is going out on a shopping spree,” Garcia Luna said. “But like most things, the devil’s in the details.”Taking inflation into account, consumer spending growth was actually softer, increasing just 2.4 percent last year over 2024. It’s a sign that GDP growth isn’t necessarily coming from consumers being more active in the economy by buying more things, but rather, they’re spending more due to inflationary price increases. And yet, it’s more than inflation that weighs on consumers’ spending decisions, Garcia Luna said. “I was trying to think about how to frame the state of the consumer,” he said. “The answer to how the consumer is doing is honestly multi-layered. It’s very complex.” The whole picture, he said, requires discussing savings rates, employment opportunities, stock and retirement income earnings, and more. All are topics state residents talked about when MPR News asked Minnesotans about their personal economic situation before the end of last year.Some said they were seeing new job opportunities opening a path towards economic stability, while others said they were afraid of losing whatever savings they had. But whether they are single mothers or financial advisers, most said they noticed rising costs in some aspect of their lives. And because of those costs, they often had to change the way they lived. What follows are the stories of how that came to be. Declining Discretionary SpendingApril Aegerter still remembers the years when she could comfortably live off her massage therapy business in St. Paul. “I’ve just been sustaining myself, and it’s great working from home, because (there’s) no overhead,” Aegerter said. “It’s mostly neighborhood people, so everybody’s close.”Over the years, she’s built a steady client base that’s helped her afford most necessities, though health care has always been out of reach. And then, the COVID-19 pandemic happened. April Aegerter poses with her family in Anoka, Minn., in 2023.Courtesy of April AegerterHer business closed and remained so long after lockdown orders were lifted, as she wanted to protect her immunocompromised aunt. “So my whole client base, you know, basically, I didn’t see them for months, and then that kind of turned into years,” she said. “Some of them never came back.”Like Alexander, Aegerter’s subsistence revolves around people being able and willing to afford discretionary spending on things such as home cleaning and personal wellness. All of which, Garcia Luna of the Minneapolis Fed notes, are the kind of things people are spending less money on. “I think it is important to distinguish that about two-thirds of consumers’ spending… 60-some percent, is spent on things like housing, health care, utilities and insurance,” Garcia Luna said. “And you know, those are not easy for individuals to cut back on. They are, you know, in a few words, less discretionary.”And with prices on such necessary expenses steadily rising since 2022, Aegerter says she’s noticed her clients are tightening their budgets more. And in those budgets, her services no longer fit. As a result, Aegerter made just $12,000 last year in her massage therapy business. “I’m overwhelmed with sadness,” she said. “I just try to pray every day that things will get better.”Aegerter says neighborhood food shelves and charities have been a tremendous help in keeping her fridge stocked. She says every penny counts these days. “I’m basically living secondhand constantly, and I don’t even have like, ‘oh, the sun’s gonna come up tomorrow,’” she said. “No, it’s not.”Inflation and the market“The way economists have been referring to this ‘K-shaped economy’, is precisely that there is a share of the population that may be supporting the economy,” Garcia Luna of the Minneapolis Fed said. He’s referring to those with higher incomes, which are growing substantially while lower-income wages stagnate. And while Chris Harrington says he’s not one of those wealthy earners, he has seen his investments’ value increase. He works remotely in Minneapolis for a national financial advisory firm. ”Decades ago, he began investing in index funds. They grow steadily but slowly, which means they tend to be for folks who, like Harrington, have lower risk tolerance and greater financial patience. Chris Harrington poses at a hike in Moose Mountain near Lutsen, Minn., in 2024.Courtesy of Chris HarringtonOver the course of over 20 years, he and his family have built a decent nest egg that’s put financial anxieties in the rearview mirror. That was true even after President Donald Trump announced steep, across-the-board tariffs on imports, which sent stock values tumbling.“We actually got a little more conservative in our portfolio as a result of that,” Harrington said. “Since then, markets have rebounded so much that we’re back up not to exactly where we were before in terms of stock allocation, but the stock portion that we have has definitely grown.” And that stock growth is a paradox for him. Inflation is increasing most of his day-to-day costs, but at the same time, that steady inflation means the companies he’s investing in are earning more. His stock valuations are going up, which is great for his long-term wealth, but in the short term? He’s having to spend more on necessities and pare down his other discretionary spending.“I wouldn’t say it’s a good thing, no, because generally, (inflation) is a cost to all of us,” Harrington said. “But those of us who can afford to own shares and companies, not only are we paying more, but we’re also earning more.”But at the same time, Harrington says he can’t put as much into his savings because of his higher everyday costs, which, Garcia Luna of the Minneapolis Fed said, is becoming more common for many consumers.“You had enhanced earnings in the years following the pandemic,” he said. “Inflation has remained high, so I think some of that is contracting the ability to save.”Some, though, have been able to break from the norm. Maureen Perry is a freelance writer and actor who lives in Columbia Heights, and she said 2026 is shaping up to be her best year she’s ever had, as her work contracts keep trucking in, while her husband landed a full-time job in marketing.“That alone is like the most kind of stable thing that we’ve had for the entire time we’ve been married,” Perry said. “It gives me even more freedom if there is fluctuation in my freelance stuff.”Maureen Perry poses in her home in Columbia Heights, Minn., on Nov. 26, 2025.Courtesy of Maureen PerryFor decades, Perry said her work has come and gone inconsistently, forcing the couple to live below their means while saving as much as they can. That’s meant maxing out their contributions to their Roth IRAs and Health Savings Accounts. And thankfully, she said, her main client continues to entrust her with projects. It’s a testament to her craft, she said, which wouldn’t have been possible had she not been given a college scholarship as a teen.“I can’t overstate how much it has probably made my life possible not having any student loan debt,” Perry said. “Even before I was a full-time freelancer, I was working very low-income jobs, so I could spend as much time as possible acting, which is not a lucrative profession.”Talking about her current situation is difficult for Perry. It has not been easy working up to a place where she can feel stability for the first time in her life. There are still other people out there, she said, working to reach that place of comfort and are, in the meantime, still struggling.“You can (also) get lulled into a sense of security, but that can vanish in an instant too,” she said. “And as a freelancer, yeah, it could be like, well, this main client went away, and now I’m back to square one.”The consumers in financial limboCassandra Grandahl, a stay-at-home mother of a three-year-old, saw her luck vanish not in an instant, but over the course of several months.“Both cars broke down. The cat needed to go to the vet. The kid needed to go to the doctor. I had to go to the doctor. Then something with the house broke,” she said. “It was just like one thing on top of another within a couple of weeks, and it totally decimated our savings.” Grandahl described their household as being middle-income. They used to shop for groceries at stores like Target and eat out often. But after getting hit with such huge expenses, they now scrimp and shop at Aldi, and rarely eat out.“We canceled all of our monthly subscriptions, our gym memberships, we don’t do any more house projects,” Grandahl said. “We do fewer activities with the kid. We don’t go to the art museum together or take ballet classes together anymore.”Her husband is the sole breadwinner of the house, earning about $100,000 a year, but with both a mortgage and a toddler in the picture, Grandahl says they’re living paycheck to paycheck even after cutting back on spending. “I literally don’t see how someone would afford to have one income,” Grandahl said. “It feels to me like something is broken in the system that we live in.” Like Grandahl, Kelley Leaf, a social work instructor at the University of Minnesota, is also feeling like she’s teetering at the edge of financial trouble. Cassandra Grandahl poses with her cat, Penny, at her home in Shoreview, Minn., in Dec. 2025.Courtesy of Cassandra GrandahlShe earns a $86,000 salary, which Leaf said has been enough to keep up with inflationary pressures and her day-to-day bills, placing her in what she calls a comfortable spot. But she’s also contending with $168,000 in student loans that are currently in forbearance.When those payments restart, she’ll be looking at shelling out a minimum of $1700 a month, the same amount as her mortgage. She doesn’t know when those payments will kick in again, nor what she’ll do then.“Does crossing my fingers and hoping count as preparing?” She wondered.For both Grandahl and Leaf, 2026 is a year filled with uncertainty and gloom. And they’re not alone in that feeling.“Expectations for higher inflation over the next 12 months, according to consumers themselves, remain high,” Garcia Luna of the Minneapolis Fed said. “While expectations for higher earnings and job finding are trending down or are trending lower, and expectations matter, because oftentimes households feel the changes in the local economies before they actually hit the statistics.”When describing Minnesotans’ overall economic picture for 2026, Garcia Luna sees a very uneven landscape – some will continue earning well and will see their incomes and portfolios rise, while others will likely continue to be squeezed by higher prices while their incomes stagnate. And then there are those like Grandahl, people whose economic outlook could change due to unexpected expenses, even with a sturdy income—those who have no idea what this year holds.“I sometimes worry about what world we’re creating for my daughter someday,” Grandahl said. “Especially with us not being able to invest as much as we had planned on investing.”She once dreamt that her child could go to college and make a successful life for herself. But these days, she’s heard that the value of a degree is decreasing. Grandahl’s husband works in the tech sector, which has also seen mass layoffs of people who just a few years ago thought their jobs might be secure forever.“By the time she’s 18, I’m not going to know what advice to give her,” Grandahl said. “I don’t know if going to college is the right idea anymore. At that point, if a degree is not going to get you a job, then why would you go? Why would you get into all that debt?”There is one thing she does know for sure, though. Grandahl said she and her husband will do their best to rebuild their savings and investments, although not for their own sake, for their daughter’s.
已发布: 2026-01-06 13:04:00
来源: www.mprnews.org
