In an economy on fire, experts offer solutions to inflation and labor issues at Midwest Economic Outlook Summit – InForum
FARGO – The economy is running hot, hot, hot.
With inflation, the war in Ukraine, labor shortages, and supply chain issues plaguing the United States, businesspeople are looking for ideas to navigate toward stability.
This research brought hundreds of people to the Midwest Economic Outlook Summit on Thursday, March 24.
The event, coordinated by the Fargo Moorhead West Fargo Chamber of Commerce, included industry experts from banking, energy, agriculture, technology, retail, manufacturing and retail. It was held in person at Delta Hotels by Marriott in South Fargo and virtually for members of 24 rooms in the area.
Neel Kashkari, president and chief executive of the Federal Reserve Bank of Minneapolis, said policymakers were trying to slow soaring inflation without triggering a recession.
Just last week, the Fed raised the federal funds interest rate by a quarter percent. This benchmark rate influences the prime interest rate, which lenders use to set interest rates for mortgages, loans, and credit cards.
The Fed is “taking its foot off the accelerator” from low interest rates, Kashkari said. “Hopefully we can engineer a soft landing.”
Kashkari said six more interest rate hikes could be on the cards this year unless the economy cools.
The United States needs more workers. Many workers are returning to their workplaces as the pandemic has eased – 580,000 a month – but that has not been enough to contain inflation.
“It’s all math,” Kashkari said. “If we want our economy to grow, we need people,” he said. This means either slowing economic growth or encouraging immigration and bringing in people with the skills the nation needs.
Kashkari said CEOs he spoke to aren’t confident supply chains will be straightened out this year, but they could be better in 2023.
He credits Congress and the Trump and Biden administrations for being aggressive in pumping stimulus dollars into the economy to stave off a recession. “It is 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 had done its recovery plan “better than anyone in the world.”
The turnaround in the number of people who were unemployed at the start of the pandemic and who are now back to work “is a miracle”, he said.
But the money spent has accelerated inflation.
“We threw the bazooka” at the problem, Beaulier said.
Markets are uncertain about the amount of money in the economy, and prices have risen on just about everything: gas, groceries, furniture, rent.
“We did this to ourselves,” to avoid economic disaster, Beaulier said. “The economy is hot.”
Highlights from industry panelists included:
— Kristie Fiegen, South Dakota Utilities Commissioner: The energy industry received “a wake-up call” with the collapse of the Texas power grid in a February 2021 winter storm, a-t she said, adding that this will require a mix of energy sources, renewable and non-renewable, to ensure lights and heating 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 United States and elsewhere could disrupt export markets. And while prices are rising, “input costs on everything (fertilizers and chemicals) have doubled and tripled,” he said.
– Shawn Riley, chief information officer for the state of North Dakota, said about 12.4 million people are employed in the tech industry, but 3.9 million jobs remain unfilled . The jobs are well paid and there is a “war for talent” going on as companies raise wages. Software and hardware prices are also rising.
– Tiffany Lawrence, acting president of Sanford Health in Fargo, said the health care industry has seen the pay of traveling nurses rise and its workers stressed by waves of pandemic patients.
Area nursing schools are not supplying enough nurses to meet the need, so Sanford is hiring 270 international nurses, but it takes 9-10 months to onboard them. Continued labor shortages mean “a tough road to walk,” she said.
– Bruce Nustad, president of the Minnesota Retailers Association, said there were “help-seeking signs everywhere” and “inflation is up in every area.” He expects consumer demand to continue at a healthy pace.
– Rachel Lolmasteymaugh, executive director of the Midwest Manufacturers Association, said COVID-19 was “hitting manufacturing pretty hard.” She said “a lot of capital spending has stopped.”
But manufacturers are optimistic and there are opportunities for growth in domestic manufacturing, she said.
–Steve Grove, commissioner of the Minnesota Department of Jobs and Economic Development, said Minnesota’s economy is strong. He said there had been a 40% increase in new businesses created over the past year. “It’s a time of innovation,” Grove said.
– James Leiman, commissioner of the North Dakota Department of Commerce, said “every region of the state” is growing. The state’s oil, gas, and coal production is strong, as is biofuels. “We’re going to be super aggressive and super growth-oriented,” he said.