The State of the Local Economy Midway Through 2024

Episode Transcript

(00:00):
Great pleasure always to welcome our officialeconomist, kfab's morning news doctor, Ernie
Goss from Creaton University, Earny,Good morning, Hey, very good to
be with you in the game.You bet. The June Mid America indexes
out and manufacturing in the in theregion shows a glimmer of good news here

(00:20):
right, Well, I wouldn't saygood news is okay news. It's much
like the national number that came atthis week, a survey of manufacturing supply
managers showing the economy is expanding abit, but not not as much as
we'd like to see. Wholesale inflationarypressures are cooling. That's the good news.
And what is pointing two in myjudgment, is a rate cut in

(00:43):
September. September the eighteenth. Ithink we'll see a rate cut. The
Fed will do it. You sayin September? Okay? Will that be
the big expectations? Will that be? Will that be the beginning of of
a domino effect on the Fed?Will they continue to do that? I
think they're going to have to.Gary, They're gonna they're going to say

(01:04):
they're reduced it. They're reducing itbecause the inflation is cool. But it's
really because the economy is weakening.And this is what we normally see with
all the economic downturns, is ifit begins cutting rates at the beginning of
the downturns. So that again isbased upon our surveys, and these are
two surveys. Our other survey ofrural of Main Street the ten States here

(01:30):
telling us much the same thing thatit's weakening. And one of the real
untold stories right now is the weakeningresidential residential construction, residential real estate.
That is huge. You know.One of the stats you've published here that
I really like as a positive trendis that more companies are bringing their their

(01:53):
international purchases back to the US,right, Yes, that's that's true,
Gary, about fifty percent for atleast a portion of them back to the
US in terms of buying. Andthat's good news and that will help to
some degree. But again that's whatthe president is assaught to do, and
that's what's happening right now. Allright, Rosie, was I want to

(02:17):
ask you too about manufacturing in thebigger picture internationally and here in America relative
vis WI beat China. Yeah,Ernie, the situation is kind of dire
since we've pretty much outsourced manufacturing inthis country for the last thirty five or
forty years. Some wonder if wehave the manufacturing capacity to fight a war

(02:38):
if China invades Taiwan, or ifthe Soviet Union invades any NATO country.
How much readiness do we have toactually create a war machine. We do
not, Rosie. In other words, you're talking about economic dependence, and
we definitely have that. For example, an invasion of Taiwan by China,

(02:59):
what that would do would be significant. We would see what would be some
of the first signs of that wouldbe the ten year treasure yield would plummet,
plummet down to something like one ina quarter percent, And that's one
of the signals. What's that forindications of problems in that area. The
other question I have involves the dollarbecause our FK Junior was talking about this

(03:23):
yesterday and he says, I ifthe dollar ever becomes second place as the
world's form of currency, then thatwould be like a nuclear bomb blast on
the American economy. First of all, tell us if that's possible or probable,
And two, what would it meanto the American economy in terms of

(03:44):
everything from employment to the stock market. It's it is certainly weakening. In
other words, the US dollar isa reserve currency and it will not we
will not lose that status in mylifetime. It's a long term we probably
will. They're just the dollar isweakening simply because of lots of factors,
tacht currencies, sovereign debt, sovereigncurrencies are just losing their status to other

(04:10):
other currencies like bitcoin and other otheruh, other replacements for that. That's
troublesome. I want to ask youbefore let me, uh, what would
be the impact, of course,would be higher interest rates. I didn't
finish that. Yeah, I shouldhave finished that statement. I appreciate that.
Uh. You look at a numberof states in the Midwest region,

(04:30):
is there anything remarkably different among them? Uh? Specifically relative how Nebraska is
doing and how Iowa is doing.Are we all basically in the same boat?
Oh? Two states stand out different. That would be Minnesota and Missouri.
And they're more tied to the nationaleconomy and not as tied to agriculture
as Nebraska. And we're all tiedinto the large degree to exports, and

(04:55):
exports have been seeing some real problemsthere, especially in terms of agricul sure
and even in manufacturing, not seeingthe growth in exports that we'd like to
see, and that's certainly a problem, especially again for agriculture. All Right,
Ernie, you're gonna shoot off somefireworks, have a hot dog.
What are you gonna do that.I'm gonna sit in my lawn chair and

(05:15):
watch everybody else do it. IHappy Independence Day of everybody out there,
and to you, Ernie. Thanksalways good to have you on, Ernie.
Guys Creating University are official economists.