Yesterday, Gov. Tim Walz surprised many by announcing that he will run for an unprecedented third term in office. No doubt he believes that he will be better placed for a run at the White House in 2028 as a sitting governor than as a former one.
What is Gov. Walz’s economic record? We will begin by looking at the most basic measure of economic activity, real Gross Domestic Product (GDP) using data from the Bureau of Economic Analysis.
Gross Domestic Product (GDP)
How should we assess the governor’s record on this measure? Fortunately, Gov. Walz was preceded by two other two-term governors, Gov. Pawlenty and Gov. Dayton. Of course, while we have full data for each of their terms in office, we are missing two years from Gov. Walz’s second term, 2025 and 2026, so we can’t compare changes over the whole period of their three governorships. Instead, we will compare average annual growth rates.
How should we assess the governor’s record on this measure? Fortunately, Gov. Walz was preceded by two other two-term governors, Gov. Pawlenty and Gov. Dayton. Of course, while we have full data for each of their terms in office, we are missing two years from Gov. Walz’ second term, 2025 and 2026, so we can’t compare changes over the whole period of their three governorships. Instead, we will compare average annual growth rates.
There is a further difficulty. Both Gov. Pawlenty and Gov. Walz saw significant economic downturns on their watch; the financial crisis of 2008-2009, and Covid-19 respectively. If we don’t believe that either man was entirely or even largely responsible for these shocks to the state’s economy, then it would not be fair to compare their performance over their time in office to that of Gov. Dayton, who inherited a recovery and was gone before COVID-19 hit. So, we will compare their average annual growth rates with that of the United States.
Figure 1 shows the difference between the average annual rate of GDP growth in Minnesota and the United States generally for governors Pawlenty (2002-2003 to 2009-2010), Dayton (2010-2011 to 2017-2018), and Walz (2018-2019 to 2023-2024). Over all three periods, our state has underperformed the country as a whole, but this has got markedly worse under Gov. Walz. While, under Gov. Pawlenty, Minnesota’s average annual GDP growth was 0.1 percentage points below that of the United States and 0.2 percentage points lower under Gov. Dayton, under Gov. Walz it has lagged by 1.1 percentage points. Under Gov. Walz, Minnesota’s long-standing underperforming of the national economy has got worse.
Figure 1: Average annual GDP growth rate in Minnesota minus that of the United States, percentage point
GDP per capita and population
GDP growth is just the sum of population growth and per capita GDP growth. Has our state’s economy grown simply because there are more of us or have individual Minnesotans, on average, got better off?
Figure 2 shows the difference between the average annual rate of population growth and per capita GDP growth in Minnesota and the United States generally for the same three periods as Figure 1. We see that, on population growth, Gov. Dayon fared best relative to the nation generally, with an average rate at about the national rate while both Gov. Pawlenty and Gov. Walz underperformed the United States’ rate by 0.2 percentage points.
But Gov. Pawlenty can say that growth in the average income of Minnesotans did best, relative to the United States generally, on his watch, with an average annual growth rate of GDP per capita above that of the nation generally by 0.1 percentage points. While our state slipped on per capita GDP growth relative to the United States under Gov. Dayton, under Gov. Walz it has collapsed. The average annual rate of per capita GDP growth under him is 0.9 percentage points lower than it was for the United States generally, comfortably the worst performance of the three governors. On this crucial measure of economic welfare, our state’s ranking has gone from 29th out of 50 states under Gov. Pawlenty to 23rd under Gov. Dayton and 41st under Gov. Walz.
Figure 2: Average annual GDP per capita and population growth rates in Minnesota minus those of the United States, percentage point
Minnesota’s growth slowdown
The fact that Minnesota’s per capita GDP growth has slumped in recent years relative to that of the United States generally will come as no surprise to regular readers. As I noted in my report “Accounting for Growth: Measuring the sources of per capita economic growth at the state level,” our state’s rate of GDP growth is the only one to have lagged that of the nation as a whole in every single year since 2014, and in 2024 we became, for the first time on record, a below average income state. No doubt Gov. Walz will be thinking “third time lucky.”