Federal Reserve Kansas City representatives have been our area the past couple days, providing relevant economic updates to local officials and business people, and getting first-hand information on economic issues in our area.
Among them was Chief Economist and Omaha branch Senior Vice President Nate Kauffman, who said after 10 years of expansion before the pandemic, the overall economy is finally on pretty solid ground after several years of high inflation.
However, during a forum held Wednesday at the Gering Civic Center, Kauffman said agriculture was showing “signs of concern” heading into the pandemic, and is now starting to do so again. “You had a period of three years where incomes were at a level that allowed producers to pay down debt, to make investments in other things, and ultimately be very well positioned financially for maybe a time period that wasn’t quite as strong,” said Kauffmann. “So, this is where we now sit, a little bit of what I would call an inflection point or potentially a turning point, as we’ve entered 2024. We’ve seen a decline in commodity prices, specifically in grains, less so in cattle, which of course is important for this region. But some of the challenges that we’ve started to see show up in agriculture have been that we are now looking at lower profit margins.”
Kaufmann said the Federal Reserve’s mandate is really a balancing act between promoting full employment and keeping prices stable, trying to keep inflation limited to no more than two percent.
Also on hand was Kansas City Federal Reserve President and CEO Jeff Schmid, who said the interaction with locals is a vital part of the work the organization does, helping inform some of their financial decisions through research.
Schmid said he sees communities as the nerve center of a local economy, and financial institutions are the vascular system, with both impacting area businesses and homes.
During a Q&A session at the end of the forum, both were asked about the recent revision for nationwide job creation over the past 12 months, where the figures were lowered by more than 800,000. Hoffmann said while changes in the jobs figures do have a direct impact on the employment portion of the Fed’s dual mandate, there’s no single indicator used by the organization to decide the direction of their policies.
Schmid said as an analyst, you look at the level and trend, and the latter didn’t change much. He also said officials are exploring more sources of data, including the impact of Artificial Intelligence, and the potential to get better data in a more timely manner.
There was no discussion on how much, if any, interest rate relief could be coming next month after a meeting of the Federal Open Market Committee.
