Regional economist finds ‘nervousness’ in SW MN
Fed\\\\\\\\\\\\\\\'s Ninth District official visits Marshall, Lamberton
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MARSHALL -- A regional economist with the U.S. Federal Reserve found that there is a “sense of nervousness” among businesspeople in southwest Minnesota.
Erick Garcia Luna, a regional economist at the Federal Reserve Bank of Minneapolis, was in Marshall and Lamberton last week to meet with businesspeople in the southwest Minnesota.
"It’s our job to be out there in the community hearing what businesses have to say to us, what workers are saying and what people in the community are experiencing," Garcia Luna said.
He said his job is to track the Federal Reserve’s Ninth District, which covers Minnesota, the Dakotas, Montana, and parts of Michigan and Wisconsin. That tracking includes surveys conducting studies, or in this case, hearing real-time feedback.
Garcia Luna did not reveal businesses that shared feedback with him. He indicated they represent a variety from retail, manufacturing and agriculture.
Garcia Luna said there was a general sentiment of positivity and uncertainty. He said that the sentiment is influenced by a variety of factors, including advancements in technology, policy effects and geopolitical activity. He says all those factors are trickling down to small businesses.
"The economy is resilient," Garcia Luna said. "But there is a sense of nervousness."
The struggle in labor supply was one of the main concerns expressed by businesspeople. He said with an aging population there’s more people retiring and there’s not enough people entering the labor force to replace them. He also mentioned that immigration does play a role in labor supply.
Many businessowners also mentioned inflation as an issue, Garcia Luna said. One of the Federal Reserve’s goals is to keep inflation at a "steady" 2%. According to the Personal Expenditures Index, inflation is currently at 3.7%.
"A majority of participants are feeling inflation is hitting their pockets," Garcia Luna said.
Garcia Luna said there are a variety of factors pointing to high inflation, and emphasized the importance of not just blaming one single thing. One thing he did mention was goods inflation -- the increase in prices of material goods -- has been going up in the post-COVID era.
He also mentioned energy inflation. Garcia Luna said that energy is particularly volatile, meaning that the price can fluctuate quickly compared to other goods. He said the Iran War in the past couple months has shocked the price of energy many times.
Garcia Luna emphasized the importance of the agriculture economy. He said the ag economy plays a large role in southwest Minnesota and many other parts of Economic District Nine. Farmers in particular have been feeling the negative effects of the economy.
"Farmers have been suffering," Garcia Luna said.