In red hot economy, experts offer takes on inflation, workforce issues at Midwest Economic Outlook Summit
Event put on by the Fargo Moorhead West Fargo Chamber of Commerce included experts from the banking, energy, agriculture, technology, retail, manufacturing and retail sectors.
FARGO — The economy has been running hot, hot, hot.
With inflation, war in Ukraine, workforce shortages and supply chain issues bedeviling the U.S., business people are seeking insights to navigate toward stability.
That search brought hundreds to the Midwest Economic Outlook Summit Thursday, March 24.
The event, coordinated by the Fargo Moorhead West Fargo Chamber of Commerce, included experts from the banking, energy, agriculture, technology, retail, manufacturing and retail sectors. It was held in-person at the Delta Hotels by Marriott in south Fargo and virtually for members of 24 chambers around the region.
Neel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis, said policymakers are trying to slow ballooning inflation without causing a recession.
Just last week, the Fed raised the federal funds interest rate one-quarter percent. That benchmark rate influences the prime interest rate, which lenders use to set interest rates for mortgages, loans and credit cards.
The Fed is “taking the foot off the accelerator” of low interest rates, Kashkari said. “I hope we can engineer a soft landing.”
Kashkari said another six interest rate increases could be in the cards this year, unless the economy cools.
The U.S. needs more workers. Lots of workers are returning to their workplaces as the pandemic has eased — 580,000 a month -- but it hasn’t been enough to keep inflation in check.
“It’s all math,” Kashkari said. “If we want our economy to grow, we need people,” he said. That means either slowing economic growth, or embracing immigration and bringing in people with the skills the nation needs.
Kashkari said the CEOs he’s talked to aren’t confident the supply chains will get straightened out this year, but may be better in 2023.
He credits Congress and the Trump and Biden administrations for being aggressive in injecting stimulus dollars into the economy to prevent a recession. “It’s better to respond with too much rather than too little,” he said.
Scott Beaulier, dean of the College of Business at North Dakota State University, agrees.
Beaulier said America did its stimulus “better than anyone in the world.”
The turnaround in the number of people who were unemployed during the early pandemic and now back to work “is a miracle,” he said.
But the money spent revved up inflation.
“We did throw the bazooka” at the problem, Beaulier said.
The markets are uncertain about the amount of money in the economy, and prices have risen on just about everything: gas, groceries, furniture, rent.
“We’ve done this to ourselves,” to avoid an economic disaster, Beaulier said. “The economy is red hot.”
Highlights from industry panelists included:
– Kristie Fiegen, a South Dakota public utilities commissioner: The energy industry got “a wake-up call” with the collapse of the Texas power grid during a February 2021 winter storm, she said, adding that will take a mix of power sources, renewable and non-renewable, to ensure the lights and heat stay on.
– Bob Sinner, president of SB&B Foods, said the agriculture industry is seeing the highest market prices in a decade. But the war between Russia and Ukraine, and bad weather in the U.S. and elsewhere, could roil the export markets. And while prices are up, “input costs on everything (fertilizer and chemicals) have doubled and tripled,” he said.
– Shawn Riley, the chief information officer for the state of North Dakota, said about 12.4 million people are employed in the technology industry, but there are 3.9 million openings that need to be filled. The jobs pay well, and there’s “a talent war” going on as companies bid up salaries. Software and hardware prices are also going up, too.
– Tiffany Lawrence, interim president of Sanford Health in Fargo, said the health care industry has seen travel nurse pay jump and its workers stressed by waves of pandemic patients.
The region’s nursing schools aren’t putting out enough nurses to cover needs, so Sanford is hiring 270 international nurses, but it takes 9-10 months to bring them onboard. Continued worker shortages mean “a tough road ahead,” she said.
– Bruce Nustad, president of the Minnesota Retailers Association, said there are “help wanted signs everywhere” and “inflation is up across the board.” He expects consumer demand to continue at a robust pace.
– Rachel Lolmasteymaugh, executive director of the Midwest Manufacturers Association, said COVID-19 “hit manufacturing quite hard.” She said "a lot of capital spending came to a halt.”
But manufacturers are optimistic and there are opportunities for growth in domestic manufacturing, she said.
– Steve Grove, commissioner of Minnesota’s Department of Employment and Economic Development, said Minnesota’s economy is strong. He said there has been a 40% increase in new business starts in the last year. “This is a time of innovation,” Grove said.
– James Leiman, commissioner of North Dakota’s Department of Commerce, said “every region in the state” is growing. The state’s oil, gas and coal production is strong, as are biofuels. “We’re going to be super aggressive and super growth-oriented,” he said.