By Luke Martel and Anna Petrini

Is there a disconnect between economic reality and public perception?

Toby C. Madden, regional economist at The Federal Reserve Bank of Minneapolis, told attendees at NCSL’s most recent Midwest States Fiscal Leaders Meeting that the vast majority of people he speaks with “don’t realize that we are producing record amounts” right now. He blamed this disconnect on unevenness in the economic recovery. Certain states, economic sectors and socio-economic groups have outpaced others.

Before NCSL’s Legislative Summit in Minneapolis, its Fiscal Affairs program hosted a preconference for fiscal leaders from Midwestern states. At the meeting, Madden provided an economic outlook during which he emphasized that the United States “is in an economic expansion.” In 2013, GDP hit record levels in 38 states, and “2014 is shaping up as another record year,” he said.  However, he noted that 12 states are still in recovery.

According to Madden, homebuilding usually leads the United States into periods of economic expansion. However, this recovery has been led by other sectors, including manufacturing, information technology, science, natural resource development, mining and agriculture. He explained that housing growth is just now kicking in but is poised to “help keep the expansion going.”

Madden said, “manufacturing is expanding and leading, but there is a lot of turmoil with new products coming in,” because the economy is now experiencing “a hyper-growth rate of technologies.” He also cited manufacturing employment statistics as contributing to a public perception disconnect.  He explained that the manufacturing sector is “the growth engine for our economy,” but people don’t realize this because the sector produces more today than ever before with fewer employees.

According to the Federal Reserve Bank of Minneapolis, moderate economic growth is expected to continue during the rest of 2014 and into 2015. Madden cited fiscal issues, a European or Chinese crisis, and changes in agricultural production as potential risk factors that could derail the economic expansion currently underway.

Luke Martel is a senior policy specialist in NCSL’s Fiscal Affairs program. Anna Petrini is a policy associate in NCSL’s Fiscal Affairs program. Email Luke. Email Anna.