State of the Economy

U.S. ECONOMY TODAYRESIDENTIAL REAL ESTATE MARKET

WEAKHOME SALES LOWDEPRICIATION OF PROPERTY VALUE

REAL ESTATELENDING IN THE CONSUMER MARKET

POTENTIAL BUYERS ENCOUNTEREDDIFFICULTY FINDING FINANCINGHARSHER TERMS IN LENDING

WAGEMODERATE OR LIMITED WAGE

GROWTHWAGE PRESSURE FROM THE PEOPLE IS

REPORTED TO BE MODERATE.EXCEPT FOR A FEW SKILLED LABOR

POSITIONS

TOURISM/AUTOMOBILELOW TOURISM DUE TO HIGH GAS

PRICESPEOPLE TAKING VACATIONS CLOSER

TO HOMEDROP IN CAR AND LIGHT TRUCK

SALES, BUT SALES IN FUEL-EFFICIENT CARS IS SOLID.

PRICESPRICE INCREASESFOOD, CHEMICALS, ENERGY, METAL, AND

PETROLEUMINCREASE IN INPUT COST PASSED ON TO

CONSUMERS, BUT EXPECTED PRICES CONTINUE TO RISE

MINNEAPOLIS GROWTH AT A SLUGGISH PACE FROM

LAST YEAR

REAL ESTATEMINNEAPOLIS IS NO EXCEPTION TO THE

HOME CRISIS.HOME SALES DROPPED 6% IN

MINNEAPOLISHOME VALUE DROPPED BY 4% STATEWIDE

IN WISCONSIN.

REAL ESTATE

REAL ESTATEUNITS PERMITTED FOR CONSTRUCTION

FELL 67% IN APRIL FROM LAST YEAR IN THE ST. PAUL AREA IN MINNEAPOLIS

REAL ESTATECOMMERCIAL CONSTRUCTION HAS

SLIGHTLY INCREASEDNEW HOTELS BEING BUILT IN SOUTH

DAKOTATHROUGHOUT THE WESTERN PART OF

THE DISTRICT THERE IS EXPANSION

WAGES/LABORLABOR MARKETS ARE FLATGREAT NUMBER IN LAYOFFS DUE TO

TIGHT EMPLOYMENTA PRODUCER OF COMPUTERDISKETTES WILL CLOSE ITS PLANT BYEND THE YEAR IN NORTH DAKOTALEAVING 390 WORKERS OUT OF THEJOB

WAGES/LABORLIKE THE REST OF THE COUNTRY

MINNEAPOLIS HAS HAD A MODERATE INCREASE IN WAGES

THE MINNEAPOLIS FED EXPECTS WAGES AND BENEFITS TO GO UP 2.4% PER WORKER IN THE NEXT 12 MONTHS

PRICESMINNEAPOLIS HAS HAD AN INCREASE IN

PRICESPRICES FOR STEEL/ALUMINUM HAVE

GONE UP 35%FLOUR PRICE HAS RISEN 130% IN THE

PAST 3 MONTHS, WHICH HAS LED TO AN INCREASE IN PRICE FOR A LOAF OF BREAD

TOURISMMINNESOTA BASED AIRLINE HAS RAISED

ITS PRICES DUE TO HIGH GAS PRICESTHE TOURISM IN SPRING WAS DOWN DUE

TO THE WET, COOLER THAN USUAL WEATHER

HOPES ARE UP FOR THE SUMMER

AGRICULTURE

DUE TO BAD WEATHER CONDITIONS THERE IS A DELAY IN PLANTATION AND DEVELOPMENT OF CORN AND SOYBEAN

FARMERS CONCERNED THAT HIGH COSTS IN INPUT WILL LEAD TO HIGHER PRICES FOR CONSUMERS IN SOYBEAN, WHEAT, AND CORN

Change in Money Stock

PropositionAN INCREASE IN THE CURRENT FEDERAL

FUNDS RATE BY 25 BASIS POINTS

Why worry about inflation now?

Changes in the CPI

Changes in Inflation Expectations