The Federal Reserve (FED) Open Market Committee (FED) meets again on March 22nd to evaluate short term interest rates. Due to the inflationary pressures produced by higher prices for energy-related products, imported goods and other commodities, I expect the FED to once again raise interest rates by 25 basis points at this meeting. This rate hike will bring the funds rate to 2.75 percent, its highest level since September 2001 when it was 3 percent. Our monthly survey of 1,800 supply managers (www.outlook-economic.com) indicates that the economy continues to expand at a healthy pace with rising inflationary pressures and increasing employment.
In fact in our suvey we are beginning to receive reports of labor shortages in high skill occupations in heavy manufacturing. This is particularly the case for those businesses that sell abroad. The weak dollar, making U.S. goods cheaper abroad, has had a very significant and postive impact on the states that I survey each month. These 9 Mid-American states are: Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
Our next survey results will be released on Tuesday March 1st at 9:00 am. They will be posted to the website listed above by mid-day.
Ernie Goss, Ph.D.
Professor of Economics