9th District Federal Reserve

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9th District Federal Reserve

• State of the Economy

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U.S. ECONOMY TODAY

• RESIDENTIAL REAL ESTATE MARKET
• WEAK
• HOME SALES LOW
• DEPRICIATION OF PROPERTY VALUE

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REAL ESTATE

• LENDING IN THE CONSUMER MARKET
• POTENTIAL BUYERS ENCOUNTERED
• DIFFICULTY FINDING FINANCING
• HARSHER TERMS IN LENDING

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WAGE

• MODERATE OR LIMITED WAGE GROWTH
• WAGE PRESSURE FROM THE PEOPLE IS REPORTED TO BE
  MODERATE.
• EXCEPT FOR A FEW SKILLED LABOR POSITIONS

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TOURISM/AUTOMOBILE

• LOW TOURISM DUE TO HIGH GAS PRICES
• PEOPLE TAKING VACATIONS CLOSER TO HOME
• DROP IN CAR AND LIGHT TRUCK SALES, BUT SALES IN
  FUEL-EFFICIENT CARS IS SOLID.

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PRICES

• PRICE INCREASES
• FOOD, CHEMICALS, ENERGY, METAL, AND PETROLEUM
• INCREASE IN INPUT COST PASSED ON TO CONSUMERS,
  BUT EXPECTED PRICES CONTINUE TO RISE

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MINNEAPOLIS

• GROWTH AT A SLUGGISH PACE FROM LAST YEAR

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REAL ESTATE

• MINNEAPOLIS IS NO EXCEPTION TO THE HOME CRISIS.
• HOME SALES DROPPED 6 IN MINNEAPOLIS
• HOME VALUE DROPPED BY 4 STATEWIDE IN WISCONSIN.

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REAL ESTATE
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REAL ESTATE

• UNITS PERMITTED FOR CONSTRUCTION FELL 67 IN
  APRIL FROM LAST YEAR IN THE ST. PAUL AREA IN
  MINNEAPOLIS

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REAL ESTATE

• COMMERCIAL CONSTRUCTION HAS SLIGHTLY INCREASED
• NEW HOTELS BEING BUILT IN SOUTH DAKOTA
• THROUGHOUT THE WESTERN PART OF THE DISTRICT THERE
  IS EXPANSION

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WAGES/LABOR

• LABOR MARKETS ARE FLAT
• GREAT NUMBER IN LAYOFFS DUE TO TIGHT EMPLOYMENT
• A PRODUCER OF COMPUTER
• DISKETTES WILL CLOSE ITS PLANT BY
• END THE YEAR IN NORTH DAKOTA
• LEAVING 390 WORKERS OUT OF THE
• JOB

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WAGES/LABOR

• LIKE THE REST OF THE COUNTRY MINNEAPOLIS HAS HAD
  A MODERATE INCREASE IN WAGES
• THE MINNEAPOLIS FED EXPECTS WAGES AND BENEFITS TO
  GO UP 2.4 PER WORKER IN THE NEXT 12 MONTHS

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PRICES

• MINNEAPOLIS HAS HAD AN INCREASE IN PRICES
• PRICES FOR STEEL/ALUMINUM HAVE GONE UP 35
• FLOUR PRICE HAS RISEN 130 IN THE PAST 3 MONTHS,
  WHICH HAS LED TO AN INCREASE IN PRICE FOR A LOAF
  OF BREAD

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TOURISM

• MINNESOTA BASED AIRLINE HAS RAISED ITS PRICES DUE
  TO HIGH GAS PRICES
• THE TOURISM IN SPRING WAS DOWN DUE TO THE WET,
  COOLER THAN USUAL WEATHER
• HOPES ARE UP FOR THE SUMMER

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AGRICULTURE

• DUE TO BAD WEATHER CONDITIONS THERE IS A DELAY IN
  PLANTATION AND DEVELOPMENT OF CORN AND SOYBEAN
• FARMERS CONCERNED THAT HIGH COSTS IN INPUT WILL
  LEAD TO HIGHER PRICES FOR CONSUMERS IN SOYBEAN,
  WHEAT, AND CORN

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Rate Adjustment Recommendation
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Change in Money Stock
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Proposition

• AN INCREASE IN THE CURRENT FEDERAL FUNDS RATE BY
  25 BASIS POINTS

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Why worry about inflation now?
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Changes in the CPI
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Changes in Inflation Expectations
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