It's Our Business

New Challenges for the New Year

1/10/2022

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

As I am sure you have all heard by now, Mayors Carter and Frey have reinstated citywide mask mandates for all licensed businesses in St. Paul and Minneapolis. This position is fully supported by the Minnesota Medical Association. Talks remain of St. Paul and Minneapolis considering going beyond masks to require proof of vaccination in some public places. Read what citizens have to say here. Edina City Council voted down a mandate proposal and Bloomington will consider a "strongly worded recommendation" at their council meeting tonight. At this point, we don’t see a mask mandate proposal on the agenda for Roseville, Maplewood, Woodbury, Eagan, Apple Valley, IGH, or Oakdale.
Worried you may have caught the virus that causes COVID-19 over the holiday season? The Minnesota Department of Health has partnered with Vault Medical Services to offer free at-home test kits delivered to your door and this is the week the Biden administration is set to launch its mass at-home testing plan with a website designed to deliver 500 million free test kits to American homes.
How is the state responding to Omicron? New Minnesota COVID-19 testing sites started opening this past Friday. And Gov. Tim Walz said he believes the peak of the current Omicron wave will be the third week of January. That’s according to the Mayo model.
CDC posts rationale for shorter isolation, quarantine.

Last week, the Supreme Court heard oral arguments regarding the ETS.

On Tuesday, Federal Reserve Chairman Jerome Powell will testify before the Senate Banking, Housing and Urban Affairs Committee for his nomination hearing to remain in the position for another term. And on Thursday, Federal Reserve Governor Lael Brainard will also testify before the committee for her own hearing to become vice chairman of the Fed.
Unemployment today cuts deeper and lasts longer, driving rise in income risk. “Big data” research finds college-educated, higher-skilled workers suffer increasing earnings shocks and volatility.
A fighter for low interest rates, Minneapolis Fed chair says U.S. needs two rate increases in 2022. This is the first time Kashkari has signaled support for a rate hike since joining the Fed in 2016.
State manufacturers rallied in 2021. Rebound is a credit to the employers and workers, but challenges remain. That said, December’s PMI dropped from 61.1 to 58.7. Still in growth, but slowed slightly due to ongoing supply chain challenges.

Federal:

President Biden will deliver his first State of the Union address before a joint session of Congress on March 1.

State:

MnDOT Commissioner Margaret Anderson Kelliher has announced her upcoming departure, as she has been nominated to be the Director of Public Works for the City of Minneapolis.

Regional:

Public Safety: listen in on latest SPDA/BOMA Public Safety Check on Jan 5, 2022, and get update on the upcoming federal trial in St. Paul.
St. Paul’s Mayor Carter appoints new chief of staff, press secretary, and engagement coordinator – and more are ahead.
MatasCastillo elected Ramsey County Board chair: Ramsey County Commissioner Trista MatasCastillo will take the helm at Minnesota’s second-largest county after her peers elected her to the board chair role last Tuesday.
Commissioner Kathleen Gaylord was elected chair in Dakota County, and announced that this would be her last year in office.

Read more updates in our weekly Chamber Advocacy Update.

Looking for an update on the economy? Inflation? Workforce? Join us on Jan 12 for our virtual Lunch With Leaders, guest speaker: Neel Kashkari, President and CEO of the Mpls Fed.
St. Paul and Minneapolis have significant challenges ahead. Join us on January 27 at the University of St. Thomas to hear what our mayors have to say at our annual Breakfast With the Mayors.
Our biggest event of every year is our Annual Meeting. More crucial than ever today is cyber security, and we’ll be hearing about that this year from this country’s preeminent voice: Join us on February 17 at RiverCentre to hear from the Director of the NSA/Cyber Command, General Paul Nakasone.

Playbook for 2022: How to speed up your hiring process.
Check out 7 questions that can lead to visionary leadership and see how you can create a shared vision and exemplify that kind of leadership.
Lately I’ve read several interesting articles on hiring on the “Great Resignation” and how to adapt:

Minnesota Vikings announce recipients of social-justice grants totaling $1M. Follow the link to read about Turnsignl, Allsquare, and 11 other well-deserved awardees.
Redistricting: On January 4th, 2022, history was made once again as the Minnesota Special Redistricting Court Panel heard oral arguments in support of a community developed and BIPOC centered map. Actually, the judges heard arguments for and against four separate proposals. The court is expected to release new maps on February 15th, 2022.

Major projects completed in 2021.
Citing rent control, Luther Seminary freezes plans to sell lower campus for housing – Twin Cities
St. Paul rail agreement supports second train to Chicago: A proposed $31 billion acquisition involving two freight rail giants won’t imperil plans to add a second daily passenger train trip between St. Paul and Chicago — and it could mean service will begin sooner than expected.
Homebuilding in the Twin Cities reached a 16-year high in 2021. Rental apartments accounted for more than half of all housing construction in 2021.

New Challenges for the New Year

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