On paper, Minnesota’s economy looks solid. Jobs remain near record highs. Economic output is growing. Major employers, from the Mayo Clinic to 3M, are hiring. And the state’s unemployment rate remains below the national average — a statistic often cited as proof of broad economic health.
On the ground, the story feels different. Many Minnesotans experience a daily reality marked by high prices, shrinking financial cushions, and a feeling of being stuck in their jobs. And yet, as they read positive headlines and see others thriving, many are left with a pervasive sense that the economy is working well — just not for them.
And economists say both impressions are true, rather than contradictory. Minnesota isn’t experiencing one post-pandemic recovery. It’s experiencing two.
“The top 10 percent of income earners are responsible for 50 percent of consumption,” said Tyler Schipper, associate economics professor at the University of St. Thomas. Moody’s Analytics recently reported that top earners now account for a higher share of spending than any point since it started tracking the figure in 1989.
Related: Minnesota’s economy: changing spending habits as inflation keeps squeezing budgets
“So when we measure economic activity — GDP, retail sales — we’re really observing the behavior of people who are doing relatively well.” Aggregate data like these indicators “doesn’t give every household an equal vote,” he said.
Measures that treat each person equally, regardless of income, tell a different story. Consumer sentiment surveys measuring how people feel about the economy show falling confidence. The University of Michigan’s widely watched confidence index dropped 4.9% from October to November and is down nearly 30% from a year earlier. The last time Americans, on average, expressed a net positive view of the U.S. economy was February 2020.
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That divide, between strong top-line indicators and sinking household outlooks, can be a hallmark of what is sometimes called a “K-shaped” economy. It’s not a perfect metaphor, but it has become a useful visual shorthand: one group climbing upward, another slipping or stagnating.
“When averages look good but half the population feels terrible, that’s not a contradiction. It means the income distribution has widened,” Schipper said.
That gap can be shown using a number of indicators and trend lines. But it can also be seen in the lived experience of Minnesotans who find themselves on opposite sides of this gulf.
Barry: “It’s not my economy”
Barry Page, 68, earns over $900 a month in Social Security and pays more than $1,000 in rent. He has been looking for work since January, when an arrest — later deemed improper with the charges being dismissed — led to the loss of his job as an industrial painter. Despite the case’s dismissal and expungement, he says the record still haunts his job applications and background checks.
“I’ve been trying to get a job for almost a year,” he said on a recent afternoon while waiting for the Metro Green Line at a University Avenue fast-food restaurant in St. Paul and picking at his french fries. “They look at that computer and they say, ‘He’s too old,’ and that’s that.”
His monthly expenses — rent, groceries, utilities — exceed his income before he has bought food for the week. “If I put all my Social Security check toward rent, I can’t pay my gas bill, my electric bill. I have to have a job.”
A fast-food meal that once cost $8–9 now runs him $15. “You get what they give you,” he said, holding up a sandwich he described as “salad with bread.”
He’s resigned himself to paying prices he never would have two years ago. But he’s still angry that companies are able to charge those high prices, because higher earners can afford them.
“Society sets prices for them, not us. They can afford it. We’re struggling to live in their economy,” he said, referring to higher-income Minnesotans. “It’s not my economy.”
Page relies on friends, including a pastor and a friend in Washington, D.C., that he’s currently waiting on a call from, to keep him afloat. “If it wasn’t for them, I’d be on the streets,” he said.
For him, like millions of other Minnesotans, the economy isn’t abstract. It isn’t a graph. It’s an increasingly unreliable ladder, where the rungs feel less stable today than they did the day or the year before.
Joe: “We’re tightening up, but we’re fine.”
Twenty miles away, on the other arm of Minnesota’s economic trajectory, is Joe Mueller, a real-estate agent and owner of a growing rental portfolio. He said his companies collectively gross around $1.25 million a year, though his net take-home is likely less than half that. He describes himself as someone who once “came from nothing.” He used to sell real estate out of a rusted $400 pickup that he’d park around the block from showings.
Now, Mueller occupies a financial reality most Minnesotans will never see, as a successful real estate agent and owner of The MOVE Group at RE/MAX.
As prices have climbed, he and his wife have trimmed some discretionary spending — ending vacations earlier, opting for cheaper flights, being “mindful of waste.” But those adjustments aren’t necessary, but rather precautionary.
“We don’t stress over the price of eggs,” he said. “That’s a blessing, and I recognize that it’s not the same for everyone.”
When prices rose, he didn’t go without; he optimized his spending to match the happiness it brought him and his family. “If you can do a $5,000 vacation for $3,000 and still get 90 percent of the experience, that’s great,” he said.
When asked about economic worry, he rejected the word. He prefers “prepared.” “Every economy has cycles,” he said. “You adjust. You weather it. You don’t pull the fire alarm.”
Mueller’s experience is emblematic of high-earning Minnesota households. Like everyone, they recognize conditions have shifted compared to before the pandemic. But they are able to recalibrate their spending and lifestyle from a position of confidence, not desperation.
More broadly, and in stark contrast to Page’s outlook, for Mueller, the economy is not a threat. It’s a system that still works, as long as you stick to the right strategies, maintain the right buffers, and stay in the right mindset.
Why economists say these two realities can coexist
Mueller and Page are not symbols — they’re Minnesotans living through the same macroeconomic conditions but experiencing them in fundamentally different ways.
Mueller’s household has buffers — equity in real estate, cash flow from rentals, diversified income, and enough discretionary spending to adjust when he needs to.
“When things tighten, we tighten,” he said. “If a recession comes, we’ll weather it. We live below our means, and we’re willing to dial back the extras.”
Page’s household has no buffers and no margin to absorb a surprise.
“When I was working, I was good,” he said. “I was bringing home $2,500 to $3,500 a month. But now — now I’m getting $967 and rent is $1,035. I ain’t got nothing left.”
How can their experiences be so disparate, and why are their trajectories diverging instead of converging?
Economists say the trend of divergence is no longer simply an artifact of the pandemic or a short-term mismatch between supply and demand. Instead, it reflects a deeper pattern of different groups moving through fundamentally different economies.
Related: Minnesota economists, researchers fear politicization of jobs data
Perhaps most alarming for those who have held traditionally middle-class jobs — police officers, teachers, manufacturing supervisors, and many others — is that this is no longer a low-income vs. high-income dichotomy. Labor market trends, combined with inflation, means many middle and upper-middle-income households are struggling to make ends meet and are only one layoff or emergency from slipping down the rungs of the income ladder.
The orthodox view of Minnesota’s economy — low unemployment, steady job growth, high labor-force participation — is not inaccurate. But those averages have masked a widening split within the state’s households, one that economists say has been building quietly for years and is now showing up more plainly in certain data points.
“You really can’t talk about one economy anymore,” said Kjetil Storesletten, a macroeconomist at the University of Minnesota. “You have multiple trajectories depending on assets, education, and where you sit in the labor market. The aggregate number is just the weighted summary of all of those realities.”
Those “weights” matter. When higher-income households — who both earn more and spend far more per person — continue to spend, the economy’s overall indicators look resilient even if many other households are straining to just keep up with the basics.
“We observe an aggregate number, but behind it are many separate distributions moving differently,” he said. “Averages can hide enormous disparities.”
Read more: Not just vibes: These economic indicators raise concerns about Minnesota’s economy
Editor’s note: The University of Michigan’s consumer confidence index dropped 4.9% from October to November. An earlier version of this story misstated the change.
The post How’s Minnesota’s economy? The answer depends on your income bracket appeared first on MinnPost.
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