Top economists tackle inflation at REDI’s Eastern Idaho Economic Summit
Teresa McKnight, Regional Economic Development for Eastern Idaho CEO, spearheaded the 2023 Eastern Idaho Economic Summit.
DAVID PACE dpace@postregister.com Aug 11, 2023
Top economists tackle inflation at REDI’s Eastern Idaho Economic Summit
The good news for homeowners: The local median home price is higher than the national average. The bad news for consumers: Rising housing costs have been a driver of the rise in services inflation.
Those were just some of the takeaways from the 2023 Eastern Idaho Economic Summit. Regional Economic Development for Eastern Idaho held its annual summit on Friday at the Brickyard Events Center in Ammon.
REDI CEO Teresa McKnight said the organization provides “business retention, expansion and recruitment; workforce development, education, training and recruitment; and enhances research and entrepreneurial activities for 16 counties in eastern Idaho.”
National macroeconomic trends greatly influence what occurs in the state and regional economies.
“The latest data indicates that inflation is cooling,” McKnight said. “The bad news is that consumers should expect prices to stay high for a while.”
Experts provided summit attendees with a high-level overview of the state of the national economy.
Luiz Oliveira, lead associate economist for the Federal Reserve Bank of San Francisco, spoke to more than 30 assembled business and community leaders via Zoom.
“Inflation remains elevated despite recent easing,” Oliveira said. “Economic activity has been normalizing. Labor market remains tight, but hiring activity is moderating. … Excess savings have been drawn down rapidly lately, but households remain more liquid compared to the pre-pandemic period.”
He said current inflation rates are about 3%, a sharp decline from the 7% peak in mid-2022, but still above the Federal Reserve’s long-term goal of 2%.
Rising housing costs have been a major contributor to the rise in services inflation, he said.
Robert Spendlove, Zions Bank senior vice president and economic and public policy officer, said rising housing costs have negatively impacted one of eastern Idaho’s traditional selling points.
“Idaho Falls’ median home price is $375,000, which is higher than the national average, which is really remarkable,” he said. “Some of our long-term selling points have been good workforce and relatively affordable cost of living. That’s just not true anymore. (The median home price is) still lower than Idaho overall, but it is higher than the national average.”
The average home value in Idaho is now $442,820, significantly higher than the national average of $348,853, he said.
Inflation has been driven in large part by a $6.7 trillion increase in U.S. money supply between February 2020 and April 2022 following the pandemic.
Spendlove addressed the possibility of a recession.
Paraphrasing Federal Reserve Chairman Jerome Powell, Spendlove said nobody knows if a recession is coming or how bad it would be if it comes.
Currently, the Fed’s interest rates are the highest they’ve been in 20 years, with a 5.34% effective rate, Spendlove said, and further interest rate increases are likely on the horizon.
Thirty-year mortgage rates have also reached their highest point in 20 years at 7%, up from under 3% in 2021.
Locally, unemployment numbers are strong but Bonneville County’s low 2.6% unemployment rate also could be hurting the economy as job vacancies are left unfilled.
“Our biggest struggle is very low unemployment. Eastern Idaho has some of the lowest unemployment in the state and in the nation, really,” Spendlove said. “That constrains the ability of the economy to grow as much as it wants to.”
Despite the challenges, REDI economist Jacob Ferris said that Idaho’s economy remains strong.
U.S. World and News Report recently ranked Idaho as the third best state for businesses in the economy of the future.
“With an overall (ranking) of second in fiscal stability, second in the economy, as well as 10th in infrastructure and 19th in opportunity, we can see where Idaho has this ability to be a focus of the future,” Ferris said.
Local leaders also addressed the community’s resilience and willingness to tackle difficult challenges.
Greater Idaho Falls Chamber CEO Paul Baker cited the collaboration of College of Eastern Idaho with Mountain View Hospital and Idaho Falls Community Hospital in founding the Idaho Healthcare Institute to increase the region’s supply of nurses and provide good-paying jobs.
The event was also sponsored by the Greater Idaho Falls Chamber and the Rexburg Area Chamber of Commerce.