In advance of my thoughts for the week, two things. First: Monday was a day to join together to honor Dr. Martin Luther King Jr, whose legacy of hope continues. I am fueled especially by my favorite of his words of inspiration: “Faith is taking the first step even when you don’t see the whole staircase.”
Second: I’d like to highlight our Celebrate Business Success/Service Success awardees for this month’s Lunch With Leaders. Congratulations first to the Pioneer Press, for 175 years in business – before MN became a state! Check out and buy their book, Twin Cities Snapshots, History through the Lens of the St. Paul Pioneer Press. I have it already and it is a beautiful tribute to our city’s history. Also, congratulations to Merrick Community Services, for their 116 years of service to Saint Paul. Merrick supports individuals and families to navigate life transitions, find health and stability, and promote independence. This includes food service, Meals on Wheels, and employment services. Interested in supporting? Ahead are a food drive, March 1-30, and their Spring fundraiser, Uplift.
Last week at our quarterly Lunch With Leaders, we heard from Ben Malin, VP of the Research Division of the Federal Reserve Bank of Minneapolis. The topic? One of my favorites: “Recent Economic Developments and Outlook.” Ben described 2023 as “The Return of Supply.” It was a year of pleasant surprises in that inflation moderated, despite economic activity being more resilient than expected. Meanwhile, the labor market – thought still tight – has moved into better balance.
If you remember, the Fed raised interest rates by more than 4% in 2022 and yet, in 2023, the economy modestly surpassed all expectations (measured by inflation levels, GDP growth, and unemployment). Inflation levels fell steadily from a high of 7% in 2022 to approximately 3% at end of 2023. There is anticipation for more price “deflation” into 2024, including both commodities and housing/rent prices. Still higher than pre-COVID but continuing to course correct. The big question: did we actually experience a recession in 2023? The answer is no. Overall economic growth was just under 3%, against projections of about .5% growth. Current projections are that 2024 growth will be slower, more like .5 - 1% GDP growth, but still – again – not into recession territory.
What “carried the day” in terms of GDP? Mostly consumer spending. Household spending has been more resilient than expected, and workforce productivity improved. And the tight labor market is slowly returning to balance. In early 2022, nationally we saw about a 6 million-person gap between job openings and size of labor force (both employed and looking). That gap closed through the end of 2023, with labor force participation rate increasing. By the end of 2023, that gap was closer to 3 million persons, which should lead to a moderation in further wage growth.
In terms of housing: in 2023, the components most contributing to inflation were Housing and Services (excluding energy) prices. Housing/rental prices look to have peaked in early 2023 and should fall further. To get inflation down to the goal of 2%, we will need to see both Housing and Services prices continue to course correct in 2024. Of note: the largest component of Services inflation has been wage increases.
The Federal Open Markets Committee (FOMC) remains committed to bringing inflation back to target level of 2% (currently at approximately 3%). At their December meeting, no change was made to interest rates. Most news out of that meeting were results of economic projections we’ve discussed above. We may be near the peak of the policy rate hiking cycle, and the FOMC now is at the point of the monetary policy “tightening cycle” that requires even more care. Chair Powell’s post-meeting remarks reflected that: “We will continue to make our decisions meeting by meeting, based on the totality of incoming data…” So we’ll see. If you’d like to see the FOMC’s projections for 2024, you can read these notes and summary of economic projections from the December meeting.
See you in the trenches,
Aaaand…. we’re off! Before I get to my thoughts for this week, I want to flag some exciting events ahead this month, wanting to make sure they are on your radar. Wednesday’s Lunch With Leaders is our Economic Outlook with the Federal Reserve. This one is virtual (yay!). On January 23 is our annual Breakfast With The Mayors. Be sure to join us! And, finally, if you’re hiring, join us on January 24 for Ramsey County’s Inclusive Hiring Connections Summit. All upcoming events can be found on our Calendar.
I’m thinking of tomorrow’s Saint Paul City Council Inaugural Ceremony at the Ordway. Much has been said about the historic nature of the all-female Council, the first time in the city’s 170-year history. I look forward to being there, to congratulate and celebrate. The Star Tribune had a great article this weekend, about the history of women in Saint Paul politics. As a former female officer in the U.S. Army, I am deeply appreciative of women who choose to compete. To lead. And, as a Boomer/Gen Xer, I also feel it’s important to usher in the next generation of leaders. These women are smart…. talented… determined. My next question, then: what are they going to do? I can tell you what we’re going to do. We’re going to spend time with them, understand their priorities, share ours, and start working together. Tomorrow is upon us. And we’ve got a lot of work to do.
See you in the trenches!
Welcome back! I hope you had time to recharge over the holiday week. We sure did! Because I got sick, I spent a lot of time lying on the couch watching movies. My favorite kind of movie is one with a redemptive message. Somewhere along the line, the hero/heroine grows. For example, Ironman is my guy because I enjoy the redemptive story line… and then, of course, he ultimately saves the world. No matter the story, the thread of redemption appeals to me because such a journey requires that we check that our actions are aligned with our thoughts/values.
I had a “man in the mirror” moment after a particularly good episode of Suits. I was reacting to Harvey’s opponent, and judging. Hard. I wound up chuckling at myself over my reaction, but I later reflected on two things:
1. How important it is to “respond” rather than “react.”
2. How we need to assume good intent.
And that certainly applies to us as we look toward our work ahead this year, building bridges to advance regional priorities. Our job at the Chamber is defined by service. And our specific lane is in the advocacy, promotion, and advancement of an inclusive economic advancement. The guidance above helps me get my own attitude straight when the work requires that we “wrestle.” Here's to a year of responding thoughtfully in the face of challenge and assuming good intent!
See you in the trenches,
This is my last blog for 2023… can you believe it? Next week we are all hopefully sharing time with people we care about, and recharging for 2024. So today I want to reflect back on 2023 and talk just a bit about what’s ahead for 2024.
Our 2024 Annual Meeting theme is “Building a New Table.” Last year we talked about “Investing in Tomorrow.” The themes build on one another – this idea that future economic success for this region and state depend on us finding ways to work together as we usher in tomorrow, and doing so with new ideas, new voices, new approaches.
I recently had the opportunity to meet with Kurt Zellers of the MN Business Partnership. We talked about this as well, in the context of policy work. As we prepare for the 2024 legislative session, it is critical that the employer community align ever more intentionally. And find ways to connect productively with our legislators. Because we have much to wrestle with: rent control, environmental permitting reform, employer mandates, a potential fifth-tier tax increase, and more. Your chamber and regional/state partners will work on this together. And the new table? Inviting YOU to join us. More than ever, your unique voice will be critical in communicating your priorities and concerns. Those of us who would prefer to leave the tough conversations to “someone else” no longer have that luxury. So look forward to being invited in, asked to contribute your voice to our work in 2024 and beyond.
Wishing you all a blessed holiday season, and looking forward to more important work together in the new year!
See you in the trenches,
First off, a tremendous shout-out to everyone who celebrated with us at our annual Holiday Chamber Connect last week! Yes, I’m sure holiday elves are trending on social media….. (you had to be there). We had a great time, and I was especially gratified to see our chamber partners engage as well.
Which brings me to my thought for this week: Building a New Table. It’s also the theme of our Annual Meeting on Feb 29, and we already are gearing up!
In my conversations with you, some of you have expressed this sense of, “where do I belong anymore? I’m not sure where I fit in….” You could be referring to the political landscape, or even your Chamber environment where you are seeing so many new faces. I get it - economic swings, demographic shifts, rapidly changing technology, partisanship in politics all challenge us to redefine the meaning of belonging and gathering. I hope you know that all we do is intended to build a new table for the future – for everyone. In the words of my friend Mike Burbach, we want to organize around the good things that we want. What we want is a vibrant and equitable economy, celebration of business success, a future with room at the table for all who want to participate. We have an innate need to belong; please know that your voice makes a difference. Your input, experience, and engagement make a difference.
And your Chamber is the great convener. I really hope you’ll join us at the Annual Meeting, and stay connected. Find an initiative that resonates with you. Find your own seat at the table. Because we all want to have a lasting impact, to do something that matters.
See you in the trenches,