I spent some time in St. Paul restaurants through the weekend, trying to get a sense of initial impacts from vaccine mandates. Some restaurants are checking cards; others have closed inside dining. All I visited checked my vaccine status at the door (I use the Docket app for ease). In the immediate term, business is down across the board. All I spoke to reported significant reservation cancellations, one along West 7th reported business down by 75% over the weekend. The good news is that patrons generally are being gracious with the process. I have taken a few calls from individuals who tell me that, given the new mandate, they are more willing to come downtown. Thus far, the numbers haven’t borne that out. I do like what Tim Niver of Saint Dinette said: “Mandates aren’t here to help business. They’re here to help people…if you have your vax card, just come eat.” Though he, too, confirms that business has remained down. Meanwhile, issues of public safety and increased crime continue to be a very real, very deep concern. The entire community is weary and wary. How much more of this is ahead, we all wonder? We persevere, but we are very, very tired. And we all are on the edge. I hear it in the tone people are using with one another, the tension and anger that is bubbling just below the surface, the divisive language and ugly accusations being thrown against people who disagree on any of the serious the issues of the day…. These last two years of will-it-ever-end-COVID-19 coupled with very serious concerns of public safety have upended our lives. Completely. And we’re still all over the place in terms of our experience/opinions of both. It’s messy and lonely. May I offer one thought for all of us to hold onto? Kindness, people. Speak kindly, think kindly, behave kindly. Now more than ever are we called to a higher standard. We can disagree; absolutely. But let’s do so with comity. When I need to calm my own mind, I turn to Mahatma Gandhi. And he tells us that, “when I despair, I remember that all throughout history… there have been tyrants and murderers and, for a time, they can seem invincible; but, in the end, they always fall. Think of it – always.” That sounds like a pandemic to me. See you in the trenches. B
Public Safety:
Regional
Read more updates in our weekly Chamber Advocacy Update.
We were delighted to host Minneapolis Fed Chair, Neel Kashkari, to our January Lunch With Leaders event this past Wednesday. I have paid special attention to the Fed these last 18 months, tracking the markets and inflation – and monetary policy – as we adapt to the changing face of this pandemic. As always, I find Kashkari both personable and eloquent, as he talked about the balancing work constantly underway at the Fed. I’m sharing some highlights that I found particularly relevant: “The basic job of the Fed is to manage the ups and downs in the US economy to try to achieve stable overall economic growth.” We have dual mandate: 1) stable prices, typically 2% inflation year over year; 2) maximum employment. They are linked like a seesaw. As the economy heats up and businesses compete for workers, traditionally this leads to unemployment rate going down, wages going up. Those, then, lead to prices increases and inflation. Fed raises interest rates to keep the seesaw in balance. Pre-pandemic, we saw very low unemployment, we did not see wages increasing significantly, and inflation remained very low. That in itself actually was unique. So the economy was in a very good place pre-COVID. Then we experienced an unprecedented shock to the economy. Recovery has begun, but it is uneven – within the service industry in particular. In the meantime, people have shifted spending towards goods. So this last year we saw big inflation and excess demand for goods. This translated to supply chain disruptions… part due to COVID, part due to this excess demand. Right now, we are seeing very high inflation, higher than expected and longer than expected. The key question: how long will it last? On the demand side, we know how much Congress has allocated to stimulus. We know that is temporary and now fading. So the boost of excess demand ultimately will go away as well. The question, then, is supply. When do supply chains recover? This is a big area of uncertainty: when will workers return? Nationally we are at 3.9% unemployment, and yet we still are 4-5M jobs short of where we should be without the pandemic. Where are the workers and what will it take to get them to come back to work? 6-9 mths ago I focused on generous unemployment benefits – now expired. Did not translate to a meaningful uptick in employment. Schools were closed – now far more reopened compared to last Spring. Again, did not significantly impact the labor market. Clearly, lots of certainty continues. So the timeline of supply side normalizing remains uncertain. Informally, companies are guessing: “not in 2022, maybe in 2023.” When we look at financial market indicators: there is long term confidence is that inflation will settle down. But we still have to watch the data. Kashkari’s most interesting comments, for me, were on interest rates and how the Fed uses them: The housing market is one of the primary channels through which monetary policy affects the economy. If we move the federal fund rate up, long term rates typically go up with that. That essentially “cools down” the housing market somewhat. We have a lot of effect on that. We have signaled we will stop our quantitative easing program, rate increases are likely in the horizon, but mortgage interest rates are still at quite low levels. A key factor: what interest rate is “neutral” for the current economy? That neutral rate changes over time and has been declining over the last 20-30 years to very low levels. “We try to estimate where that neutral rate is, and then we decide whether we want to provide some boost to the economy, then we’ll go below neutral to provide stimulus. Or, if we want to tap the brakes, we would raise interest rates above neutral.” We’re not likely to return to interest rates seen 20-30 years ago, because today’s “neutral” is so different. Mortgage interest rates should remain fairly attractive for the foreseeable future. My takeaways from our conversation: expect interest rates to go up in 2022, perhaps 2 adjustments this year. Long term indications are good that the underlying fundamentals of the economy will right the ship, as it were. But 2022 will continue to be a year of readjusting – particularly in the workforce. One more note from the Fed: the next quarterly business survey from the Minneapolis Fed will be conducted from Monday, January 17 to Monday, January 24. Please take this 5-minute survey to help the Minneapolis Fed and President Neel Kashkari better understand effects on your firm. With other business voices from across the Ninth District, your input will help the Federal Reserve System shape monetary policy to help businesses thrive. If you get this survey from multiple sources, please respond to the survey only once. See you in the trenches. B
Federal:
State:
Regional
Read more updates in our weekly Chamber Advocacy Update.
Great read this past weekend, the January 2022 U.S. Economic Outlook (don’t judge me). I am prepping for our January Lunch With Leaders this Wednesday, January 12, our guest speaker being Neel Kashkari, President/CEO of the Minneapolis Fed. The event is now virtual, so it's easy to join! Register here. Chair Kashkari also recently published an essay on his recommendations for interest rate increases in 2022: he has changed his outlook for monetary policy and I’m very interested. Kashkari continues to anticipate that the high inflation we currently are experiencing will be transitory. That said, he believes the Federal Open Market Committee (FOMC) must balance two opposing risks: 1) transitory high inflation which leads to an increase in long-term inflation expectations, which then leads to sustained high inflation; and 2) once the COVID-19 shock finally passes, the economy returns to the low-growth, low-inflation regime it operated in for the 20 years prior to the pandemic. Given the remarkable uncertainty in the economic outlook and these two-sided risks to monetary policy, the challenge is to respond to short-term inflation impacts without doing so too aggressively and pushing the economy into recession. If you want the details (which includes charts!), read Kashkari’s essay here. And, again, join us on Jan 12 to hear from him yourself. If any of you are looking to refinance, buy or build a home, or make a capital investment in your business, this will be especially interesting to you. On the U.S. economic outlook, an overall theme of growing resilience of the U.S. economy to the pandemic. 3 highlights: consumer confidence dipped only slightly in December, despite a rapid increase in COVID-19 cases; companies are holding onto workers even as cases rise since they expect future demand to hold up; financial vulnerability increased in December, and increases in the costs of basic monthly necessities relative to wages is eating into Americans’ savings, making steady employment more important than ever. One more note from the Fed: the next quarterly business survey from the Minneapolis Fed will be conducted from Monday, January 17 to Monday, January 24. I’ll share the link with you next Monday. See you in the trenches. B
Federal:
Read more updates in our weekly Chamber Advocacy Update.
First of all, happy new year. I was so glad of the break, though I am still recovering from too much food and too few wins at cards with the family. While I was gone, of course I kept up on the news – as I’m sure you all did. Public safety is really heavy on my heart today – and still. Like most of you, I’m sure, I’ve been stewing on the latest crimes in St. Paul – a brazen mugging of an elderly woman followed by a carjacking of a young mother and her child – both by 1 adult and 2 teenagers with criminal histories. At least two of these young men highlight an additional challenge – they should have been detained as a result of previous serious convictions. So many of these crimes are being committed by known offenders, as in the two incidents above. Which takes me to another article from Dec 22, about long time Ramsey County and Washington County prosecutors who walked away from their jobs last year, one “citing his frustration with policies he says are designed to keep offenders out of jail.” We need a victim-centered approach to our public safety, one that includes the police making the arrests and the judicial system actually holding the offenders responsible – and detaining them. Separate and yet related is the upcoming federal civil rights trial of the 3 ex-Minneapolis police officers to be held in St. Paul starting this month (jury selection begins Jan 20). Why is it being held in St. Paul, you ask? Very good question. Cases are assigned randomly to federal judges, and U.S. District Judge Paul Mangnuson's chambers are in downtown St. Paul. The city had asked for the trial to be moved to Minneapolis. The St. Paul Police Department continues with their planning phase in advance of the trial in order to achieve their goal of protecting the people, property, and free speech of all involved parties - and helping minimize disruptions to those of you who live and work in the downtown neighborhood. One of the first things you will notice changing around the courthouse is the fencing that will be erected. The fencing will encompass the block the courthouse sits on and will require one lane closure on each street (Jackson, Kellogg, Robert and Fourth) along the curb line. We can expect that the lane closures will expand as we get closer to the beginning of the trial. Follow this link to sign up for BUSINESS information meetings hosted by the St. Paul police department. Public safety has to be Job 1, which requires that all partners from the police through to the judicial system are in alignment. Your Chamber is making public safety a top priority moving forward, to ensure your voice, your concerns, are communicated. We all have a role to play in keeping our community safe, because the assurance of public safety is essential. Your Chamber’s public affairs department is convening a subcommittee looking at the business role in public safety. For updates on that work through the year, subscribe to our advocacy newsletter. See you in the trenches. B
State:
Regional
Read more updates in our weekly Chamber Advocacy Update.
CEOs from some of public companies, private companies, professional services firms, health and insurance, hospitality and entertainment, media and communications, commercial real estate, construction, banking and finance all reflect on lessons learned in 2021. From “permanent work from wherever, whenever” policies to digital transformation, to a greater appreciation for our resiliency, to the convergence of our personal and professional lives. Interesting read! What work looks like in 2022: what do you think about a 4-day work-week? As we experience the Great Reshuffle, this and other issues contribute to employee retention– and preferences for the future of work. The new CEO toolbox: Rethinking what it means to be a high-performing leader. St. Paul looks to attract more diverse developers – particularly for housing development services.
|
Archives
February 2025
|