Minnesota has now logged two consecutive quarters of declining economic output, which is one of the commonly used signals of a recession.
But as with the U.S., which also saw small drops in gross domestic product in the first six months of the year, most experts say that we aren't yet — or weren't then — in a recession.
"I think what it says is that we're adjusting to the shock of the pandemic still," said Louis Johnston, an economics professor at the College of St. Benedict and St. John's University.
Decline in economic activity is just one metric of a recession. Another big one is the labor market, which has been quite strong until recently.
Minnesota was one of 40 states that saw a drop in second-quarter GDP, according to figures recently released by the U.S. Bureau of Economic Analysis.
It saw a 1.3% decline in the April-to-June quarter, following a 0.7% decrease in the first three months of the year. That compares to drops of 0.6% and 1.6% in the second and first quarters for the U.S.
Industries in Minnesota that saw less economic activity in the second quarter include construction, nondurable goods manufacturing, wholesale trade, finance and insurance, and the military.
Johnston noted that GDP includes things like investment spending, which is money businesses put toward new buildings and new equipment.
"That's been way down partly because businesses have been uncertain so they're holding off on those purchases," he said. "That doesn't mean we're in a recession. It just means we're pausing."
Job growth has been fairly strong in Minnesota in the first half of the year. And the state's unemployment rate plummeted to the lowest ever recorded in U.S. history this summer. It ticked up slightly in August to 1.9% but still remains the lowest in the nation and near historic lows.
Job openings in the state also remain quite high. Minnesota had 226,000 job openings in July compared with 198,000 a year ago.
And state exports jumped 12% to set a record high in the second quarter at $6.7 billion.
Still, as the Federal Reserve has been making a series of aggressive interest rate hikes to try to rein in high inflation, economists say the likelihood that we may soon be in a recession is increasing.