NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — High inflation will end sometime. Ernie Goss with Creighton University says we're not there yet, but actions planned by the Federal Reserve, though they needed to do something, give him some concern.
"I think we're going to see inflation pull back a bit, but not enough," Goss said. "We're going to continue to see, I'll call it excessive inflationary pressure, something above four percent probably, for the rest of the year. It's now running between eight and nine. It's probably going to expand a bit before it falls back down. I think it will run to 10%, as much as 10% and then fall back as the Federal Reserve rate hikes cool those inflationary pressures."
Goss believes the rate hike of half of a percent anticipated in the first week of May is too late and might be too much at once.
"Historically, that's the pattern," Goss said. "In other words, you get too late and then you start increasing and then you overdo it and push the economy into slow, to no, to negative growth. That's what I expect in this case. Larry Summers, a former Treasury secretary, he's expecting a recession next year. There is a high probability that we're going to see negative growth next year, maybe even in the first half of next year and slow growth for the rest of this year."
The real concern is that too much of the economic brake from the Fed could result in stagflation, which is high inflation, high unemployment, and slow or negative real economic growth. Right now, the employment piece of that doesn't look like it's in danger, as businesses across the country are still looking for workers as they recover from the pandemic. Nonetheless, the subjects of the latest Rural Mainstreet Survey are pessimistic about the future.
"We have a confidence index," Goss said. "We asked the bankers to look out six months and our confidence index was at its lowest level since the pandemic began in the spring of 2020, March and April of 2020. There, we saw confidence fall significantly. It's back at those low levels."
This is in spite of positive signs in the rural economy, like farmland prices continuing to grow at the fastest pace since the 2006 launch of Creighton’s Bank CEO survey.