Watertown is a very small city located in the state of Minnesota. With a population of 4,791 people and two associated neighborhoods, Watertown is the 168th largest community in Minnesota. Much of the housing stock in Watertown was built relatively recently. The construction of new real estate can often be taken as an indication that the local Watertown economy is robust, and that jobs or other amenities are attracting an influx of new residents. This seems to be the case in Watertown, where the median household income is $93,008.00.

One interesting thing about the economy is that relatively large numbers of people worked from their home: 19.07% of the workforce. While this number may seem small overall, as a fraction of the total workforce this is high compared to the rest of the county. These workers are often telecommuters who work in knowledge-based, white-collar professions. For example, Silicon Valley has large numbers of people who telecommute. Other at-home workers may be self-employed people who operate small businesses out of their homes.

The citizens of Watertown are slightly better educated than the national average of 21.84% for all cities and towns, with 22.16% of adults in Watertown having a bachelor's degree or advanced degree.

The per capita income in Watertown in 2022 was $41,419, which is upper middle income relative to Minnesota and the nation. This equates to an annual income of $165,676 for a family of four. However, Watertown contains both very wealthy and poor people as well.

The people who call Watertown home describe themselves as belonging to a variety of racial and ethnic groups. The greatest number of Watertown residents report their race to be White, followed by Asian. Important ancestries of people in Watertown include German, Norwegian, Swedish, Irish, and English.

The most common language spoken in Watertown is English. Other important languages spoken here include Polish and Greek.