The regional head of the organization that sets interest rates and national financial policy was in Billings this week to talk about the economy.
On Thursday, Federal Reserve Bank of Minneapolis president Neel Kashkari talked to roughly 200 people about the trade war between the United States and China, the state of the stock market and interest rates.
He said the Federal Open Market Committee lowered interest rates earlier in the summer and then again last week. He’s a proponent of this trend and, in fact, advocated for even steeper cuts.
Kashkari said he didn’t see any reason for higher interest rates to hold the economy back.
He said wages are picking up and workers are doing better.
What isn’t doing better is business investment.
“We hear anecdotally businesses are nervous about the outlook, so they’re not investing quite as much,” Kashkari says.
He said the trade war has put pressure on businesses that export abroad and disrupted agriculture. He said farmers are anxious and some smaller operations are selling out.
Meanwhile, larger communities with diverse economies, like Billings are more resilient.
University of Montana Economist Bryce Ward agrees with that take.
“If you’re Billings or if you’re Missoula or if you’re Bozeman and you have a firm or an industry that takes a hit, it’s not great, but it’s not gonna tank your economy. The smaller communities in the state, however, they’re a little bit more exposed,” Ward says.
He gives Colstrip and its coal industry as an example.
Ward says the state has seen stable employment over the last year, and he agrees a low interest rate is a good idea, although whether the U.S. needs to go lower is hard to say.
