At the 118th American Farmers and Ranchers state convention in Norman, Oklahoma, Farm Director, KC Sheperd had the chance to visit with Megan Williams, Associate Economist and Manager in the Regional Affairs department at the Kansas City Fed’s Oklahoma City Branch office. Sheperd and Williams talk about higher interest rates and Oklahoma’s economy.
The economy is continuing to grow at a good rate, Williams said, but unfortunately, inflation still remains too high. The labor force participation rate is lower than it was before the pandemic, Williams said, so communities are still having trouble gaining back individuals who left the workforce during the pandemic.
“When businesses have trouble attracting workers, they will have to start to increase wages to try to attract those workers,” Williams said. “Once that happens, businesses are paying more for workers, then they will have to look at their own balance sheets and increase their prices to the consumers.”
Wage inflation growth is an issue, Williams said, because once those wages go up, it is difficult to bring them back down. Some businesses have turned to automation in the place of workers for jobs, she added.
“Everything has pretty much gone up, and definitely impacts the average consumer,” Williams said.
Williams also talked about the increase in interest rates. Increasing the interest rates, Williams said, will turn people away from borrowing and spending for those longer-term purchases, in particular, slowing down the economy.
“Hopefully just slow enough where we can see that inflation come down without having too many detrimental impacts,” Williams said.
During her presentation at the convention, Williams shared Oklahoma’s success story regarding the state’s population.
“The pandemic has kind of changed migration trends to the point where Oklahoma has been a major beneficiary of that,” Williams said. “People can live anywhere and work for a company that is maybe not located in the town that they live in, and that has really attracted some people to Oklahoma, given our high quality of living, low cost of living, and in general a great place to be.”
One of the reasons people were attracted to Oklahoma initially, Williams said, was because the state stayed open and running while others were shut down.
“It is not everyone’s favorite thing to do to pay higher interest rates and see interest rates rise, but it is also important to protect the value of assets that people have, and also protect the pricing power that they have,” Williams said.
