>> ERIC: WELCOME TO THIS SPECIAL EDITION OF "ALMANAC."

WE ARE LIVE FROM THE CAMPUS OF ST.

CLOUD STATE UNIVERSITY, RIGHT NEAR THE MISSISSIPPI RIVER IN STEARNS COUNTY.

THANK YOU TO MORE THAN 400 PEOPLE HERE IN THE AUDIENCE FOR THE WONDERFUL WARM St.

CLOUD WELCOME.

TANE DANGER, KAOMI LEE, AND SHELETTA BRUNDIDGE WILL BE HANGING OUT WITH SOME OF YOU LATER IN THE HOUR.

WE HAVE SOME ST.

CLOUD-FOCUSED SEGMENTS TONIGHT, INCLUDING A LOOK AT THE NEW MEDICAL SCHOOL IN TOWN, A PARTNERSHIP BETWEEN CENTRACARE AND THE UNIVERSITY OF MINNESOTA.

>> CATHY: AND OF COURSE PLENTY OF POLITICS AS WELL.

MARY LAHAMMER WILL ROUND UP THE STATE OF THE STATE ADDRESS AND JOIN US FOR A LIVE CONVERSATION.

WE'LL FILL THE COUCH WITH A SPECIAL ST.

CLOUD AREA PANEL OF LEGISLATORS PAST AND PRESENT.

BUT WE ARE GOING TO START TONIGHT WITH THE ECONOMY.

AS THE WAR IN THE MIDDLE EAST CONTINUES, OIL PRICES REMAIN VOLATILE AND GAS PRICES HAVE REACHED MORE THAN $5 A GALLON IN SOME PARTS OF THE U.S HERE IN MINNESOTA, $4.09, RIGHT HERE N St.

CLOUD.

LOUIS JOHNSTON TEACHES ECONOMICS JUST DOWN THE ROAD AT THE COLLEGE OF ST.

BENEDICT AND ST.

JOHN'S UNIVERSITY.

HE HAD A MUCH SHORTER DRIVE TO JOIN US TONIGHT.

INSTEAD OF COMING DOWN TO St.

PAUL.

AND WE WELCOME KING BANAIAN TO THE SHOW, ECONOMICS PROFESSOR HERE AT ST.

CLOUD STATE.

GOOD TO SEE YOU AGAIN.

>> THANK YOU.

GOOD TO BE ERE.

>> Cathy: PROFESSOR JOHNSTON.

>> YES.

>> athy:IST DRIVING UP 94 AND I SAW THE GAS PRICES AT 4 BUCKS 9 CENTS A GALLON, AND I'M ASSUMING THEY'RE ONLY GOING TO GO HIGHER.

I SEE TODAY THAT NEIL KASHKARI, PRESIDENT OF THE MINNEAPOLIS FED THINKS THAT INTEREST RATES WILL HAVE TO GO UP AT THE STRAIGHT OF HORMUZ -- IF THE STRAIT OF HORMUZ REMAINS CLOSED.

THAT DOESN'T SOUND GOOD AT ALL.

>> NO, AND HE WAS PRETTY VOCIFEROUS ABOUT IT BECAUSE HE'S ON THE FEDERAL OPEN MARKET COMMITTEE THAT SETS INTEREST RATES AND HE ACTUALLY FORMALLY DISSENT FROM THE STATEMENT AND SAID, WE SHOULD TAKE ANY TALK OF INTEREST RATES GOING OWN OFF THE TABLE, TO MAKE SURE THAT PEOPLE UNDERSTAND, INTEREST RATES ARE NOT GOING DOWN, THEY'RE STAYING THE SAME OR GOING UP.

AND YOU NEED TO BE READY FOR IT.

>> Eric: DESPITE THE OIL SHOCK, I WONDER IF THE OVERALL ECONOMY, THE GROWTH IN THE ECONOMY IS STILL FAIRLY SOLID, ISN'T IT?

>> IT IS.

IT IS, ERIC.

IT'S STILL BEEN A PRETTY SOLID ECONOMY.

WE'VE GOT A PERIOD WHERE WE HAVE A LOW, HIGHER LOW FIRE LABOR MARKET, BUT PRICES ARE HIGHER.

I THINK PRESIDENT KASHKARI IS CORRECT IN HIS DECISION, IT'S BEING SHARED, BY THE WAY, BY TWO OTHER PRESIDENTS, IN FACT, HE HAD FOUR DISSENTS ON THE VOTE ON WEDNESDAY, THAT WAS THE FIRST IME ANYONE ELSE 1992 THAT THAT HAPPENED.

>> Eric: WHAT'S THE RESULT FOR THE ECONOMY WITH HIGHER INTEREST RATES?

>> WELLING I HINK YOU'RE GONNA SEE THINGS SLOWER THAN THEY OTHERWISE WOULD BE.

BUT ONE THING THAT I THINK I'M CONCERNED ABOUT, I'D LOVE TO HEAR WHAT YOU THINK ABOUT THIS, KING, IS THAT THIS IS NOT ANOTHER GOOD THING FOR THE HOUSING MARKET.

>> YES.

>> WE'VE ALREADY BEEN HAVING ISSUES WITH THE HOUSING MARKETS SO INTEREST RATES ARE GOING TO BE HIGHER THAN THEY OTHERWISE WOULD SO THAT'S GOING TO SLOW CONSTRUCTION SPENDING, THAT'S GOING TO SLOW BUILDING, THAT'S GOING TO SLOW THE REAL ESTATE MARKET AND THOSE ARE ALL THINGS THAT IT MIGHT NOT CAUSE A RECESSION, BUT THEY'RE CERTAINLY GOING TO SLOW US DOWN.

>> YEAH, THAT'S BEEN PRETTY ROCKY IN THIS AREA FOR A LITTLE WHILE NOW.

AND I WOULD SAY, I WOULD SAY PROBABLY TO STAY ROCKY.

ALTHOUGH LOCALLY HERE IN THE St.

CLOUD AREA, CONSTRUCTION HAS STAYED IN A PRETTY STEADY PLACE, BUT THE TYPES OF HOUSES BEING BUILT AND WHAT PEOPLE CAN AFFORD, THE ABILITY OF PEOPLE TO MOVE, PARTICULARLY WHEN YOU GET INTO THAT PERIOD WHERE YOU MAYBE WANT TO MOVE INTO A SMALLER HOUSE, THAT'S NOT HAPPENING BECAUSE IT'S A LITTLE HARD TO GET YOURSELF TO PAY THAT INTEREST RATE THAT'S OUT THERE RIGHT NOW.

>> Cathy: YOU MENTIONED JOBS.

AND I'M CURIOUS TO SEE WHAT YOU BOTH SAY ABOUT THIS.

THE MINNESOTA JOBLESS RATE IS HIGHER THAN THE NATIONAL AVERAGE.

>> YEAH.

>> Cathy: WHICH IS THE LAST TIME THAT HAPPENED?

THAT SEEMS TO BE A CONCERN?

WHEN IS THE.

>> IT IS.

IT'S HIGHER IN St.

CLOUD THAN THE STATE AS A WHOLE.

IT'S AN INTERESTING MOMENT FOR US.

SO THAT RATE IS GOING UP AND THAT MAY WELL MEAN THAT WE ARE SEEING MORE OF OUR COMMUNITY ACTUALLY TRYING TO GO BACK INTO THAT JOB MARKET BECAUSE THEY'RE STRESSED, THEY FEEL LIKE THEY NEED TO BE OUT THERE RIGHT NOW.

AND I DON'T KNOW WHAT LOUIS THINKS ABOUT THIS, BUT I DO THINK THAT THE NEXT STEP WILL BE FOR THAT RATE TO GO EVEN A LITTLE BIT HIGHER FROM HERE.

>> I WAS LOOKING AT THIS, THE LAST TIME WE SAW THIS WAS 2006.

2006, '7 AND INTO 2008, MINNESOTA'S RATE WAS HIGHER AND WAS GOING FASTER THAN THE NATIONAL.

BUT THEN THE FINANCIAL CRISIS HAPPENED, AND THE REST OF THE COUNTRY ZOOMED UP AND WE JUST KIND OF KEPT GOING UP A LITTLE BIT.

SO I'M STARTING TO WONDER, IS THIS A LITTLE PRELUDE OF THE REST OF THE COUNTRY STARTING TO SLIP, YOU KNOW, WE'RE GOING AHEAD A LITTLE BIT AND THE REST OF THE COUNTRY'S GOING TO SEE THEIR UNEMPLOYMENT RATES START TO JUMP UP.

>> Cathy: DO WE KNOW WHAT'S HAPPENING WITH THE OB MARKET IN TERMS OF, ARE THERE ANY SIGNS OF STRENGTH ANYWHERE IN THE MARKET HERE IN MINNESOTA OR IS IT ALL JUST GENERALLY BAD NEWS ACROSS THE BOARD?

>> WELL, IT'S INTERESTING BECAUSE RIGHT AT THIS MOMENT IT'S PROBABLY MORE THE BLUE-COLLAR JOBS HAVE ACTUALLY STAYED FAIRLY STEADY IN THIS TIME.

INTERESTINGLY, EVEN THOUGH THE HOUSING MARKET HAS NOT DONE PARTICULARLY WELL, CONSTRUCTION'S BEEN OKAY.

WHERE YOU'RE SEEING THAT SLIP IS IN A FEW PLACES THAT TYPICALLY WE THINK AS BEING RECESSION-PROOF.

LIKE HEALTHCARE, EDUCATION, IN PROFESSIONAL BUSINESS SERVICES, THOSE ARE THE AREAS THAT TYPICALLY WE THINK THEY'RE GOING TO DO OKAY EVEN IN A RECESSION, BUT RIGHT NOW WE'RE SEEING SOME STRESS THERE.

>> Eric: FARM ECONOMY, A LOT OF STORIES THAT IT'S TOUGH OUT THERE.

>> YEAH.

AND I'M VERY CONCERNED ABOUT THAT SHOWING EVEN MORE WEAKNESS BECAUSE THEY'RE GETTING HIT WITH TARIFFS LAST YEAR, NOW THEY'RE GETTING HIT WITH TARIFFS AND WITH A BIG -- WELL, OIL PRICE INCREASE THAT'S SHOWING UP IN FERTILIZER, IN DIESEL FUEL.

YOU KNOW, HOW MUCH MORE CAN THEY TAKE IS WHAT I KEEP WONDERING.

>> Eric: ARE THERE REFUNDS FOR TARIFF PAYMENTS?

WAS THAT JUST TALKED ABOUT OR IS THAT SOMETHING -- >> THERE'S A MECHANISM TO DO IT.

I JUST DON'T KNOW THAT THEY'RE ABLE TO GET IT TO WHERE -- BECAUSE THE MECHANISM GOES TO WHO PAID IT.

IT WASN'T THE EVENTUAL CUSTOMER, LIKE YOU AND ME, ERIC, IT IS ACTUALLY THE PERSON THAT DID THE IMPORTING, THAT'S GOING TO GET THAT.

IF THEY PASS THAT PRICE THROUGH, YOU'RE GOING TO HAVE TO ORT OF HOPE THAT THEY BEHAVE NICELY AND SEND THAT MONEY BACK.

>> YEAH, YOU WON'T BE GETTING A CHECK.

YOU WON'T BE GETTING A CHECK.

>> Eric: OH, DARN IT.

>> Cathy: HE WAS SO HOPING HE COULD.

CHANGE GUARD OF THE FED.

JEROME POWELL IS STILL HANGING AROUND.

WHAT DO YOU THINK OF THAT?

>> I THINK HE WAS VERY CLEAR IN WHAT HE SAID, IS THAT HE'S TRYING TO PROTECT THE INDEPENDENCE OF THE FED.

HE IS WAITING TO MAKE SURE THAT THE INVESTIGATION INTO THE CHARGE THAT SOMEHOW THERE WAS AN OVERCHARGE IN THE WAY -- IN THE BUILDING, IN THE NEW BUILDING, LIKE NOBODY IN D.C.

EVER HAD TO GO OVER A BID.

HE'S GOING TO STICK AROUND.

I THINK THIS IS IMPORTANT, BECAUSE I THINK HE FEDERAL RESERVE -- THE FEDERAL RESERVE INDEPENDENCE IS A VERY IMPORTANT THING.

AND HE GAVE A VERY ELOQUENT DEFENSE OF THAT IN HIS LAST, WHAT I GUESS WILL BE HIS LAST PRESS CONFERENCE.

>> I THOUGHT IT WAS VERY INTERESTING, ESPECIALLY BECAUSE IF PRESIDENT TRUMP HAD BEEN NICE TO JEROME POWELL, SECOND READING TWO SEATS TO FILL.

AND SINCE HE WASN'T, HE ONLY GETS TO FILL ONE.

SO... >> Cathy: ALWAYS GOOD TO SEE YOU.

GREAT TO SEE YOU AGAIN, PROFESSOR BANAIAN, IT'S BEEN A WHILE, OF COURSE, WELL, PROFESSOR JOHNSTON, YOU'RE AMAZING.

>> Eric: HOW ABOUT A HAND FOR THESE ECONOMIC GUYS.

[ Applause ] >> THANK YOU.