Interest rates, housing and worker shortages top themes of Midwest Economic Outlook Summit in Fargo

Fargo Moorhead West Fargo Chamber event gathered experts in manufacturing, finance, agriculture, technology, health care and energy.

Douglas Duncan, senior vice president and chief economist at Fannie Mae, gives a keynote address during the Midwest Economic Outlook Summit at Delta Hotels by Marriott Fargo on Wednesday, Feb. 8, 2023.
David Samson/The Forum

FARGO — Shortages of trained workers, easing the housing crunch and rising interest rates were central themes at this year’s Midwest Economic Outlook Summit, held Wednesday, Feb. 8, at the Delta Hotels by Marriott in Fargo.

Looming over it all is the likelihood that the Federal Reserve will continue to raise interest rates in its efforts to corral inflation.

Americans can expect to see a mild recession for 2023, with a rebound in 2024, Douglas Duncan, the senior vice president for Fannie Mae predicted.

“Awaiting improvements in affordability” in the housing market and manufactured goods “will be a dominant theme” for 2023, the chief economist for the home mortgage financing agency said.

Duncan was a keynote speaker for the Fargo Moorhead West Fargo Chamber of Commerce event, which included panels of experts representing agriculture, manufacturing, technology, energy, finance and health care.


If Duncan had to make a bet, he says to expect the Federal Reserve to nudge the federal funds rate up three more times by about 25 basis points (one-quarter percent) each time.

The federal funds rate is now in the 4.5%-4.75% range.

But, Ron Feldman, the event’s other keynote speaker, made it clear that the Fed won’t be done until it whips inflation.

“Inflation is too high and we’re going to do everything we can do” to bring it down to a 2% annual rate, said Feldman, the first vice president for the Federal Reserve Bank of Minneapolis.

The Fed is tasked by Congress to keep prices stable and the U.S. at full employment, which means 2% inflation and “everyone who wants a job can get a job,” Feldman said.

The goal is to avoid a rising spiral of wages and inflation, and to prevent a return of 1970s-era stagflation (high inflation, high unemployment and stagnant demand).

The Fed raised the federal funds rate 425 basis points or 4.25% in 2022, Feldman said, and another quarter-percentage point so far this year.

Further rises will depend on how the data on inflation turns.


“This is a really, really complicated, challenging time,” Feldman said.

“There is no algorithm here,” he said. “We’re going to look at the data and see if it’s consistent with getting inflation down to 2% and full employment.”

Darrin Peterson, the president of Marvin, the Warroad, Minnesota-based window and door manufacturer, says finding enough workers is key to keeping up with demand.

Kurt Zellers of Primacy Strategy Group, left, moderates a discussion panel with Randy Martinson of Martinson Ag Risk Management, Camille Grade of Bushel, and Darrin Peterson of Marvin, the windows and doors manufacturer, during the Midwest Economic Outlook Summit at Delta Hotels by Marriott Fargo on Wednesday, Feb. 8, 2023.
David Samson/The Forum

“Marvin is coming off significant growth the last two years,” Peterson said. “It has been more challenging for us” to find employees. Marvin even had to bring in workers from southern states to help fill the demand for labor at the Fargo plants, he said.

Geoff Bartsh, senior vice president of market growth and retention for Medica, said the entire health care industry is struggling to find enough workers, particularly nurses and other non-doctoral degree positions.

“Many nurses left for other opportunities,” due to the pressures put on them by the pandemic, Bartsh said.

Peterson said fewer regulations on industry, and more of an emphasis on funding child care out of the Minnesota Legislature would help his firm. But on a scale of one to five, he says the future of the housing industry is overall good.

“Our industry as a whole, I am going to give it a four,” Peterson said, as housing is underbuilt for the nation's needs.


“Affordability is an issue. But there is still demand there. We’re investing for the future. We think the next decade is going to be great,” Peterson said.

Camille Grade is chief market officer for Bushel, the Fargo-based agricultural software firm.

Grade said there’s been a big infusion of capital into agricultural technology in the past few years, but with higher interest rates also mean investors want to see quicker growth toward profitability.

She also gives her industry’s outlook a four on a five-point scale.

“There is always going to be increased opportunities,” Grade said. But there may be a “course correction” ahead for the investment climate, she added

Randy Martinson, founder of Martinson Ag Risk Management, said rising interest rates have put more pressures on producers when it comes to borrowing.

The U.S. is dependent on exports, with half of the country’s wheat and soybeans sent overseas, and it faces stiff competition from Brazil, he said.

Increasing domestic demand, such as increasing the number of soybean crushing plants to produce soybean oil and soybean meal (for cattle feed) is important to give farmers more markets for their crops, Martinson said. But he, too, is optimistic.


“In the big picture, we are going to be looking at a decent spring,” Martinson said.

After June, farmers will build stocks of grains and beans, but with expenses still pretty high, the second half of 2023 could “be a come-to-Jesus moment for a lot of producers,” Martinson said.

John Tuma, a commissioner for the Minnesota Public Utilities Commission said the nation's power systems are interconnected and improved, but still have been sorely tested in the last 20 years.

Most recently, the war in Ukraine added more demand for natural gas to keep the heat and lights on in Europe, thanks to Russia’s cutoff of gas supplies. That helped push up energy costs in the U.S.

But Tuma expects energy costs to decline over the next 6-18 months, provided there are no new wars or other major disruptions.

Stacey Ackerman, managing director of Wells Fargo Private Bank, said geopolitics have affected the equity and bond markets in recent years, particularly early in the COVID-19 pandemic and when Russia invaded Ukraine.

Those are short-term crises, she said, but for investors they can be “long-term opportunities.”

So what’s the best investment strategy?


“Stay calm and carry on,” she said.

Ackerman expects the markets to turn upwards in the second half of 2023.

But there is “a steep slope ahead” in terms of getting enough affordable housing, something that is exacerbated by the drain of student loan debt on young peoples’ finances, Ackerman said.

Helmut Schmidt is a reporter for The Forum of Fargo-Moorhead's business news team. Readers can reach him by email at, or by calling (701) 241-5583.
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