>> ERIC: EARLIER THIS WEEK THE U.S LABOR DEPARTMENT REPORTED TWO KEY ECONOMIC INDICATORS.

CONSUMER PRICES IN JUNE WERE UP JUST 3% FROM A YEAR AGO.

THAT'S THE SMALLEST INCREASE IN INFLATION IN MORE THAN TWO YEARS.

AND THE NUMBER OF JOBLESS CLAIMS FELL AGAIN.

HERE IN MINNESOTA, MANY PEOPLE WERE TOUTING AN ANNUAL SURVEY THAT RANKS MINNESOTA NUMBER 5 IN THE NATION FOR FRIENDLINESS TO BUSINESS.

WHAT DO THESE NUMBERS MEAN?

WE'VE GATHERED AN ESTEEMED GROUP OF ECONOMIC OBSERVERS TO FILL THE COUCH.

LOUIS JOHNSTON IS AN ECONOMIST WHO TEACHES AT THE COLLEGE OF ST. BENEDICT AND ST. JOHNS UNIVERSITY.

CHRIS FARRELL IS AN ECONOMICS REPORTER FOR AMERICAN PUBLIC MEDIA AND CAN BE HEARD ON PUBLIC RADIO ACROSS THE COUNTRY.

AND WE WELCOME BACK JEANNE BOEH, PROFESSOR OF ECONOMICS AT AUGSBURG UNIVERSITY.

TO REVIEW, WHEN BIDEN WAS INAUGURATED, INFLATION WAS 1.4%.

WENT TO 9% IN JUNE OF LAST YEAR.

NOW WE'RE AT 3%, 4% IF YOU ROLL OUT ENERGY AND FOOD.

WHY THE ROLLER COASTER HERE?

>> WELL, A LOT OF THINGS HAVE HAPPENED, RIGHT?

IF YOU LOOK AT WHICH SECTORS THAT HAVE GONE UP AND GONE DOWN, ONE OF THEM IS ENERGY HAS GONE DOWN, RIGHT?

AND ENERGY IS AN IMPORTANT INPUT TO -- THROUGHOUT THE ECONOMY.

AND RENTAL PRICES HAVE STARTED TO COME DOWN.

USED CAR PRICES HAVE STARTED TO COME DOWN.

AIRLINE TRAVEL HAS STARTED TO COME DOWN.

SO SOME OF THE AREAS WHERE PEOPLE ARE REALLY SPENDING A LOT OF THEIR MONEY HAVE STARTED TO DECLINE.

AND THERE ISN'T ANY REASON WHY SOME OF THAT WON'T CONTINUE.

ALTHOUGH AS THEY KEEP SAYING, THE LAST MILE ON INFLATION MIGHT BE HARD TO TAKE.

ALTHOUGH SOME PEOPLE HAVE ARGUED, WELL, IT'S NOT 2% BUT IT'S 3%, SO DOES THAT MAKE ANY DIFFERENCE, AND MAYBE WE SHOULDN'T CONTINUE O RAISE RATES.

>> Eric: COULD YOU GET TO 2% INFLATION WITHOUT A RECESSION?

>> THAT'S THE $32 TRILLION QUESTION.

>> THAT'S RIGHT.

>> CAN WE DO THAT?

AND RIGHT NOW THE FED IS DOING AS GOOD A JOB AS ANYONE COULD HAVE PREDICTED, IF THAT'S WHAT'S GOING ON.

THAT, TO ME, IS THE BIG "IF" RIGHT NOW.

IS THE FEDERAL RESERVE ACTUALLY THE SOURCE OF THIS REDUCTION IN INFLATION OR IS THIS JUST LUCK?

I DON'T KNOW.

>> WELL, I THINK YOU'D SAY ONE WORD, PANDEMIC.

AND THE PANDEMIC JUST DISTORTED A WHOLE LOT OF THINGS IN OUR ECONOMY.

AND, SO, ONE WAY OF LOOKING AT WHAT'S HAPPENING RIGHT NOW AND WHY I THINK THERE IS THE NOTION THAT WE MIGHT JUST GO BACK TO 2% IS NOT CRAZY, IS IT'S COMING DOWN, WE'RE GOING BACK TO THE WORLD THAT WE WERE BACK IN 2018, 2019, WE HAD THIS PANDEMIC, YOU HAVE THE SUPPLY CHAIN ISSUES, THOSE ARE WORKING THEIR WAY THROUGH, YOU HAD ALL THIS MONEY THAT CAME INTO HE ECONOMY TO SUPPORT THE ECONOMY AND HOUSEHOLDS, THAT'S ORKING ITS WAY THROUGH.

AND, SO, WE MAY ACTUALLY JUST WITH 2% GROWTH IN A 3.5% UNEMPLOYMENT RATE, 3.6% UNEMPLOYMENT RATE, YOU KNOW, 2% ACTUALLY JUST MIGHT BE THE NATURAL STATE FOR THIS ECONOMY.

IT MAY NOT BE, BUT I DON'T THINK THAT'S AN UNREASONABLE POINT OF VIEW.

>> Cathy: HE JOB NUMBERS WERE OKAY, RIGHT?

I MEAN, DELTA EARNINGS CAME OUT, SOME OTHER MAJOR BUSINESS EARNINGS CAME OUT, NO TOO BAD.

ARE YOU STILL WAITING FOR A RECESSION?

>> I'M NOT, ACTUALLY.

I DON'T KNOW HAT THE ODDS ARE, I THINK THE LAST TIME I WAS N, I SAID ONE IN FOUR.

>> Cathy: YES.

>> AND THINK -- I'M THINKING IT'S EVEN LESS THAN THAT NOW.

MAYBE A SLOWDOWN, NOT A FULL-BLOWN RECESSION.

WE MIGHT SEE UNEMPLOYMENT GO UP SOMEWHAT, BUT I'M NOT -- I'M NOT WORRIED ABOUT AN ACTUAL DOWNTURN.

>> Eric: ARE ANY CHANGES NEEDED IN ECONOMIC POLICY IN THE UNITED STATES?

IS THERE SOME GLARING THING THAT'S NOT BEING DONE THAT SHOULD BE BEING DONE?

>> WELL, ONE ISSUE IS THAT WE'RE NOW REACHED $1 TRILLION IN DEBT PAYMENTS, RIGHT?

AND, SO, AS THAT -- AS THE INTEREST RATE WENT UP, THEN THAT PART, THAT GOES UP, AND THEN THAT STARTS CROWDING OUT OTHER EXPENSES THAT MIGHT REALLY BE MORE VALUABLE.

SO THAT'S ONE ISSUE.

RIGHT?

>> Cathy: I WONDER, CHRIS, DO YOU WANT TO ADD TO THIS?

>> THE ONLY THING I WOULD ADD, I THINK THAT WE HAVE TO SEIZE THE MOMENT OF A 3.6% UNEMPLOYMENT RATE.

THIS UNEMPLOYMENT RATE HAS BEEN AT A HALF-CENTURY LOW.

WE'RE SEEING THE WAGES OF PEOPLE WHO HAVE LIVED FOR A LONG TIME IN INDUSTRIES THAT DON'T PAY VERY MUCH, THEY'RE GETTING PAID MORE ABOVE THE RATE OF INFLATION.

SO ABOUT SKILL, TRAINING, THE DEMAND FOR LABOR IS THERE.

THE DEFINITION OF A GOOD ECONOMY IS WHEN COMPANIES ARE LOOKING FOR WORKERS.

AND WE'RE IN THAT KIND OF ECONOMY.

SO I JUST WANT ALL KINDS OF IMPATIENCE IN TERMS OF SIEZING ADVANTAGE OF THE TRAINING, THE OPPORTUNITIES THAT ARE THERE IN THIS ECONOMY.

>> I DON'T MEAN TO INTERRUPT, BUT THE LABOR FORCE PARTICIPATION RATE FOR AFRICAN AMERICANS IS AT HISTORIC HIGHS.

LIKE YOU SAID, WE NEED TO TAKE ADVANTAGE OF THIS RIGHT NOW.

SO THAT'S WHY IF SOMEONE WHO IS OUT THERE WOULD BE AT THE FEDERAL RESERVE, I'D SAY, DON'T RAISE RATES NEXT TIME.

GIVE THIS A CHANCE.

DON'T TRY TO KILL THIS OFF.

>> Cathy: I'M GLAD YOU BROUGHT UP WORKERS.

BECAUSE I'M WONDERING HERE, YOU HAVE THE S.A.G.

STRIKE WITH ACTORS AND WRITERS.

BUT I'M WONDERING ABOUT A POTENTIAL UPS DRIVERS STRIKE.

WHAT COULD THAT DO TO THE ECONOMY?

>> THAT WOULD BE A MAJOR BLOW TO THE ECONOMY.

AND IT'S A WORKFORCE OF OVER 350,000 WORKERS.

AND JUST THINK ABOUT OUR DAILY LIVES AND JUST HOW IT'S INTERTWINED.

NOT JUST IN THE HOUSEHOLDS BUT ALSO FOR BUSINESSES.

SO PART OF THIS TIGHT LABOR MARKET THAT WE'VE JUST BEEN TALKING ABOUT.

THE OTHER PART IS YOU'RE SEEING MANY MORE STRIKES.

WORKERS FEELING MORE CONFIDENT.

SO, I THINK IT WOULD BE A MAJOR BLOW TO THE ECONOMY.

MY GUESS IS IF IT HAPPENS, IT WOULDN'T LAST FOR VERY LONG BECAUSE OF THAT REASON.

ALL THE PRESSURE WOULD BE, JUST AS THE PRESSURE, WHAT WAS IT, LAST YEAR WITH THE RAILROADS TO COME TO AN AGREEMENT.

I MEAN, EVERYBODY KNOWS THIS IS NOT A GOOD THING.

AND, SO, IF IT DOES APPEN, IT WILL BE SHORT.

>> Cathy: PROFESSOR, DO YOU WANT TO MAKE ANY COMMENT ON THIS?

>> WELL, I WAS GOING TO SAY, CHRIS IS EXACTLY RIGHT, THAT ONE OF THE GOOD THINGS ABOUT THIS RECOVERY IS THAT SOME OF THE PEOPLE WHO ARE TRADITIONALLY LOWER PAID, LIKE IN RETAIL AND FOOD, HEY'VE BEEN HAVING WAGE INCREASES HIGHER THAN SOME OF THE TRADITIONALLY HIGHER PAID.

AND THAT, IN SOME WAYS, MIGHT BE WHY WE HAVE INFLATION THAT LASTS LONGER BECAUSE ONE OF THE THINGS THAT HAPPENED THIS TIME IS THAT REAL WAGES HAVE BEEN GOING DOWN.

IN OTHER WORDS, PEOPLE, THEIR INCREASES ARE LESS THAN INFLATION, BUT NOT THIS TIME, REAL WAGES ACTUALLY WENT UP, RIGHT?

I MEAN, IT'S GOOD THAT THEY'RE GETTING WAGE INCREASES, BUT AT THE SAME TIME, THAT MAY LEAD TO INFLATION DOWN THE ROAD.

>> Cathy: AY, I'M ALSO CURIOUS ABOUT THIS, HEALTHCARE MERGERS.

>> OH!

>> Cathy: THERE ARE THREE HAPPENING IN OUR REGION.

SANFORD, FAIRVIEW, ESSENTIA, MARSHFIELD HEALTH IN WISCONSIN AND St. LUKE'S AND ANOTHER WISCONSIN-BASED HEALTHCARE PROVIDER.

THOSE ARE THREE PRETTY BIG POTENTIAL MERGERS, WHAT DOES THAT SAY?

>> I'M REALLY CONCERNED ABOUT THOSE BECAUSE HEALTHCARE IS THE BIGGEST SECTOR IN TERMS OF EMPLOYMENT IN MINNESOTA'S ECONOMY.

AND HOW THIS IS ALL GOING TO SHAKE OUT IS NOT ONLY GOING TO AFFECT INDIVIDUAL JOBS, IT'S GOING TO AFFECT THE WAY HEALTHCARE IS PROVIDED AND DELIVERED IN THE ENTIRE STATE.

AND, SO, I DON'T ACTUALLY KNOW HOW IT'S GOING TO SHAKE OUT.

BUT THAT'S A PLACE THAT I THINK WE NEED TO KEEP AN EYE ON AND I'M VERY GLAD THAT THE ATTORNEY GENERAL, FOR EXAMPLE, NOW HAS POWERS TO LOOK INTO THIS.

PEOPLE ARE STARTING TO PAY ATTENTION THAT THIS IS A BIG DEAL.

AND WE NEED TO.

>> Eric: CNBC'S STATES FRIENDLY OR NOT FRIENDLY TO BUSINESS, MINNESOTA IS RANKED NUMBER 5, AND I CAN JUST HEAR THE BUSINESS COMMUNITY SAYING, HUH, ARE YOU KIDDING ME.

>> SO WHAT'S GOING ON WITH THAT SURVEY?

>> I WONDER WHAT OTHER PEOPLE'S TAKE IS.

HERE'S MINE.

MINNESOTA ALWAYS IS HIGH ON SURVEYS WHEN THEY SAY ABOUT INNOVATION AND TECHNOLOGY, QUALITY OF LIFE.

IF IT'S A SURVEY ABOUT TAXES, MINNESOTA'S ALWAYS -- DOESN'T DO VERY WELL.

>> Eric: 45th, 46th.

>> RIGHT.

SO YOU LOOK AT THIS SURVEY, WE'RE GOOD ON TECHNOLOGY, INNOVATION, GOOD ON QUALITY OF LIFE.

WE'RE NOT VERY GOOD ON BEING BUSINESS FRIENDLY BECAUSE OF THE HIGH TAXATION.

SO, IT'S AN AGGREGATE FIGURE.

AND I THINK THE THING TO TAKE AWAY FROM THAT IS, MINNESOTA DOES HAVE SOME REAL STRENGTHS, BUT ONE OF THE THINGS THAT I THINK WE NEED TO DO IS EVEN CREATE A STRONGER CULTURE FOR PEOPLE TO START THEIR OWN BUSINESS, MAKE IT EASIER TO START THEIR OWN BUSINESS.

>> Eric: HOW DO YOU DO THAT?

>> A LOT OF IT HAS TO DO WITH THE STUFF THAT WE DON'T ACTUALLY EVER SEE.

IT'S KIND OF LIKE THE EQUIVALENT OF THE BACK OFFICE, THE REGULATORY SIDE OF THE BUSINESS.

MAKING IT EASIER THERE.

BECAUSE ONE OF THE THINGS COMING OUT OF THIS PANDEMIC IS -- YOU KNOW THIS, CATHY -- THIS HUGE INCREASE IN PEOPLE STARTING THEIR OWN BUSINESS.

NOBODY SAW IT.

AND IT STAYED HIGH.

IT HASN'T DISAPPEARED AS THE PANDEMIC IS GOING INTO THE REARVIEW MIRROR.

SO IT'S LIKE HERE'S AN OPPORTUNITY TO ACTUALLY DO SOMETHING.

>> I THINK WE NEED TO WORK ON OUR EDUCATION SYSTEM, TOO.

RIGHT?

SO EDUCATION, WHEN YOU LOOK AT THIS INDEX, SOME THINGS ARE COUNTED MUCH MORE THAN OTHERS.

AND EDUCATION IS ONLY 6%, RIGHT?

BUT IF YOU LOOK AT HOW WE'VE DONE, PARTICULARLY OUR K-12 STUDENTS COMING OUT OF THE PANDEMIC, IT'S NOT GOOD, AND THOSE ARE OUR FUTURE WORKERS AND THOSE ARE OUR FUTURE SMALL BUSINESS OWNERS.

SO WE HAVE TO FIGURE OUT HOW TO HELP THOSE STUDENTS CATCH UP AND ACTUALLY DO EVEN BETTER THAN THEY WERE BEFORE.

>> Cathy: SAY, BEFORE YOU GO, WE WERE TALKING ABOUT HEALTHCARE BEING BIG IN MINNESOTA.

3M'S A BIG COMPANY.

THEY'VE GOT SOME PROBLEMS.

>> YEAH, I'M VERY CONCERNED ABOUT THAT AS WELL.

THEY'RE SPINNING OFF THE HEALTHCARE, KEEPING THE REST.

AND THE IDEA IS, WE'LL BE ABLE TO BASICALLY INSULATE THE SUITS AND THE OTHER PROBLEMS.

I DON'T KNOW IF THEY'RE GOING TO BE ABLE TO DO THAT.

AND I DON'T KNOW HOW THAT'S GOING TO SHAKE OUT IN TERMS OF EMPLOYMENT IN THE MINNEAPOLIS/St.

PAUL AND GREATER MINNESOTA ECONOMIES.

>> Eric: THEY COULD REALLY USE A POPULAR POSTIT NOTE STYLE CONSUMER PRODUCT, TOO.

>> THAT WOULD BE NICE.

THAT WOULD BE NICE.

>> Eric: HAVEN'T HAD MUCH OF THAT.

ALL IGHT, ECONOMIC