With inflation higher than it has been in over 40 years, the Federal Reserve will have to take some hard steps to bring the situation under control, and it won’t be pretty or easy for Montanans.

KGVO News spoke with Dr. Patrick Barkey, Director of the University of Montana Bureau of Business and Economic Research (BBER) on Thursday about the upcoming Economic Outlook Seminar that will begin touring the state next week.

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Barkey was asked about Montana’s current economic snapshot.

“The Montana economy is performing very well,” said Dr. Barkey. “Tax revenues are doing well. Unemployment is low. Income is high, but that growth comes with problems. There are new uncertainties there. Most of the ink (press coverage) is about Omicron, and that's certainly true. That's an uncertainty and it has had some impact on consumer spending and travel.”

Barkey then turned his attention to inflation and what must be done to bring it under control, the responsibility of the Federal Reserve (FED).

“2022 will be a year of more action taken on inflation,” he said. “And just as inflation itself has been unfamiliar to a lot of younger people that have not experienced it, so will FED tightening be a new experience because they have not been doing much of that either.”

Due to the pandemic, interest rates have been kept artificially low, but that is already coming to a close. Barkey described what effect that will have on the economy.

“In order to take some of the steam out of inflation, it will be necessary to increase the cost of money quite frankly,” he said. “So those who have gotten used to situations of low interest car loans, low mortgage rates, and for that matter, even fast growing equity markets such as stock prices, they are all going to move into a different environment.

Barkey said the BBER’s annual Economic Outlook Seminar begins next week, as the BBER staff and special guest speakers will present their take on this year’s topic ‘Where Housing is Headed’.

“We start our tour next weekend, January 25th in Great Falls, and then on the 26th in Helena,” he said. “Then on the 28th which is Friday, we're in Missoula, and then the next week we're in Billings, Bozeman and Butte Tuesday through Thursday and then the week after that we're in Kalispell on that will get us into February.”

Anyone interested in attending the Economic Outlook Seminar can click here for details and registration.

Dr. Barkey is also the author and producer of the popular Montana Economic Minute, which airs every weekday on the Montana Morning News show.

 

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