NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — Creighton University economist Ernie Goss believes the Federal Reserve is not done trying to apply the brakes to inflation by raising interest rates.
"They intend to raise rates by another 50 basis points," Goss said. "That's a half of a percent. They'll meet again at the end of this month on the 25th and 26th. The soft landing could get really bumpy in the second half of the year. That's true for the region and that's true for the United States, as the global economy is definitely slowing down."
It's not that anywhere is doing phenomenally, but China's restrictions that were COVID-related are something they have not recovered from.
"When China gets a cold, the rest of the globe gets pneumonia," Goss said. "That used to be true for the U.S. The U.S. used to carry that banner, but not anymore. It's now China. Great Britain is not doing well, Europe is slowing, slowing, slowing. I guess you could say the U.S. is the cleanest shirt in the dirty laundry right now."
Part of the ring around the U.S. collar is that even in the competitive work environment, it's hard to keep good help.
"Wage growth is doing reasonably well, but inflation has done even better," Goss said. "When you adjust those wages for inflation, it's negative. On the lower end of the spectrum, that's not true. The lower end has been doing much better than those above, or those on the higher end, though certainly on the higher end, not really. One of the important things coming out of the surveys right now, productivity growth right now is, over the last year and a half, it's the worst that we've recorded, that has been recorded since these surveys began at the national level in 1947."
An important point of this is that pre-pandemic, people's pay was not matching even this slower growth in productivity. According to a February article from McKinsey Global Institute, recently, real incomes have grown at 0.7 percent, well below the 1.4 percent gains in productivity between 2005 and 2019.
The question is how quickly can a realignment of those two numbers happen? The pandemic taught the workforce that with a solid Internet connection, they can work almost anywhere for anyone, that has made it a worldwide competition for talent.
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