>> QUICK NOTE ON THE STORY YOU JUST SAW, JANE GRAUPMAN OF THE INTERNATIONAL INSTITUTE OF MINNESOTA IS ALSO A MEMBER OF TPT'S COMMUNITY ADVISORY COUNCIL.

MOVING ON, INFLATION IN MINNESOTA IS DOWN, THE JOB MARKET IS TIGHT, STATE ISSUED REBATE CHECKS STARTED COMING OUT THIS WEEK, SO LOT OF GROUND TO COVER ITH THIS WEEK'S PANEL OF ECONOMISTS.

LET'S GET RIGHT TO IT.

JOINING US FROM THE COLLEGE OF ST. BENEDICT, LOUIS JOHNSTON, PROFESSOR MARCUS BANSAH FROM ST. OLAF CAMPUS IN NORTHFIELD, KRISTINE WEST IS HERE REPRESENTING THE ECONOMICS DEPARTMENT AT ST. KATE'S.

PROFESSOR JOHNSTON, LET'S TALK ABOUT INFLATION A LITTLE BIT AND I WONDER IF PAYCHECKS AND WAGE INCREASES ARE MAKING UP FOR THE INFLATION THAT EXISTS.

>> WELL IN GENERAL, PAYCHECKS ARE DOING PRETTY WELL.

SO THEY'RE NOT CATCHING UP EXACTLY, WHICH IS UNFORTUNATE, BUT THEY'RE DOING PRETTY WELL.

IT DEPENDS ON WHERE YOU ARE IN THE INCOME DISTRIBUTION.

WHAT'S REALLY GOOD NEWS IS THAT THE PEOPLE WHO ARE AT THE LOWER ENDS HAVE BEEN GAINING MORE THAN WHO ARE AT THE TOP.

>> Cathy: AND INFLATION OF COURSE, YOU MENTIONED INFLATION, ERIC, YOU AND I TALKED ON MPR, PROFESSOR, ABOUT HOW THE TWIN CITIES HAS AN INCREDIBLY LOW INFLATION RATE.

WHAT'S THE TWIN CITIES DOING RIGHT?

WHAT'S GOING ON THERE?

>> WELL, ONE OF THE MAJOR THINGS THAT I THINK THEY ARE DOING RIGHT IS A LOT OF INVESTMENTS THAT HAVE BEEN PUT INTO HOUSING.

HOUSING IS A MAJOR COMPONENT OF THE CPA.

WE USE THE VALUE OF HOUSING AND IF YOU LOOK AT DATA ON A YEAR OVER YEAR BASIS THERE SEEMS TO BE 1% FALL WHEN IT COMES TO THE PRICE OF HOUSING SO THAT KIND OF FEEDS INTO THE NUMBERS THAT WE SEE.

APART FROM THAT WE KNOW THAT THE STATE HAS BEEN DOING OTHER THINGS AND OF COURSE ENERGY PRICES USED TO BE REALLY HIGH, THAT HAS ALSO COME DOWN.

IF YOU LOOK AT THE DATA, IT FELL BY 16.7% YEAR ON YEAR.

THIS IS NATIONALLY, AND SO THOSE ARE SOME OF THE THINGS.

BUT I THINK HOUSING IS A MAJOR ONE THAT IS PUSHING IT DOWN.

>> Eric: WELL, AND THE INTEREST RATE FOR HOME LOANS NOW IS OVER 7%?

>> I SAW THAT.

>> Eric: SINCE 2002 I THINK.

>> RIGHT.

>> Eric: HOW DOES THAT AFFECT THE PICTURE HERE?

>> WELL, IT CERTAINLY MAKES IT MORE EXPENSIVE AND HARDER FOR PEOPLE TO GET INTO NEW HOUSING AND PROBABLY LOCK SOME PEOPLE INTO HOUSING CHOICES WHEN THEY'RE LOOKING TO MOVE.

IT IS AN INTERESTING SORT OF JUXTAPOSITION OF THE DATA THAT THE HOUSING COSTS ARE DOWN AND YET THE INTEREST RATES ARE UP.

AND SO, YEAH, WE'LL SEE HOW THIS SHAKES OUT.

>> Cathy: HELP US OUT HERE.

WHAT'S THE LINK BETWEEN AFFORDABLE HOUSING AND INFLATION?

>> OKAY.

SO HOUSING PRICES DEPEND ON INTEREST RATES.

INTEREST RATES DEPEND ON INFLATION.

SO IF INFLATION, FOR EXAMPLE, GOES UP, THAT USUALLY MEANS INTEREST ATES ARE GOING TO GO UP TO COVER THAT EXTRA INFLATION.

THAT MAKES HOUSING PRICES -- WELL, IT MAKES HOUSING MORE EXPENSIVE, EITHER THROUGH THE ACTUAL INTEREST RATE THAT YOU PAY ON YOUR LOAN, OR IN THE VALUE OF THE HOUSE, DEPENDING ON -- ONE OR THE OTHER, SOME DISTINCTION OF THOSE TWO.

HIGHER INTEREST RATES, MORE EXPENSIVE HOUSES USUALLY.

BUT AS MY TWO COLLEAGUES WERE MENTIONING, THERE'S OTHER FACTORS THAT ARE GOING ON HERE.

IF YOU'RE BUILDING MORE HOUSING THAT'S GOING TO HELP KEEP THE PRICE DOWN.

OR INTEREST RATES ARE ALSO GOING TO REDUCE DEMAND FOR HOUSING AT GIVEN LEVELS OF PEOPLE'S INCOMES AND THINGS LIKE THAT.

>> Cathy: SO IN THIS CASE OF THE TWIN CITIES BUILDING HAS BEEN PRETTY ROBUST.

>> YEP.

>> SURE, SURE.

THE MORE HOUSES YOU CAN SUPPLY TO THE MARKET, INTEREST RATE IS ALREADY HIGH WHICH MEANS THAT DEMAND MAY BE GOING DOWN.

MAYBE ONLY THOSE WHO REALLY NEED IT NOW WANT TO GO IN FOR IT.

IF PEOPLE CAN WAIT A LITTLE BIT AND THEY DON'T REALLY HAVE A NEED FOR IT, THEN WE WANT TO WAIT FOR THE INTEREST RATE TO GO DOWN A LITTLE BIT BECAUSE IF THE INTEREST RATES ARE HIGH AND GOING FOR A MORTGAGE, YOU'RE GOING TO BE PAYING A LOT OUT OF POCKET AND IF YOU DON'T WANT THAT YOU MAY WANT TO KIND OF WAIT.

SO IF SUPPLY OF HOUSING HAS INCREASED, DEMAND FOR HOUSING HAS SLOWED DOWN THEN WE HAVE THAT GROUP WITH DOWNWARD PRESSURE.

>> Eric: YOU THREE DEAL WITH SMART YOUNG PEOPLE.

WE HEAR FROM THE STATE DEMOGRAPHER THAT YOUNG PEOPLE ARE LEAVING THE STATE.

I WONDER AS YOU HAVE CONTACT WITH THESE KIDS, HOW DO YOU KEEP THEM HERE.

WHAT ARE WE NOT DOING THAT WE SHOULD BE?

>> THIS IS KEY, RIGHT, KEEPING PEOPLE IN THE STATE OF MINNESOTA AND ATTRACTING NEW PEOPLE TO THE STATE OF MINNESOTA.

OUR BIGGEST PROBLEM RIGHT NOW IS THE DEMAND FOR LABOR HAS OUTSTRIPPED THE SUPPLY.

WE HAVE A SHORTAGE OF LABOR, WE NEED MORE WORKERS AND WORKERS TO HAVE THE SKILLS FOR THE JOBS THAT THE STATE NEEDS.

SO KEEPING, THE POLICIES TO KEEP PEOPLE HERE ARE PROBABLY SIMILAR TO SOME OF THE ONES WE SAW COMING OUT OF THE LEGISLATURE THIS TERM.

WE HAVE THESE FAMILY LEAVE POLICIES AND WE HAVE INVESTMENTS IN EDUCATION THAT DO THE KIND OF THINGS THAT LIKE CONVINCE PEOPLE THAT MINNESOTA IS A GOOD PLACE TO LIVE AND WORK WHERE YOU CAN BALANCE WORK AND FAMILY.

>> Eric: SAME QUESTION.

>> WELL, I THINK YOU COVERED THAT.

WE ALSO HAVE TO I THINK REALLY ENCOURAGE IMMIGRATION.

THAT'S ONE OF THE THINGS THAT HAS REALLY HELPED MINNESOTA A LOT, ESPECIALLY OVER THE LAST 40, 50 YEARS, THAT HAS BEEN REALLY IMPORTANT.

AND SO THE SLOWDOWN IN IMMIGRATION AT THE NATIONAL LEVEL IS HURTING US AT THE STATE LEVEL ESPECIALLY.

SO THE MORE THAT WE COULD DO TO ENCOURAGE THAT, THE BETTER OFF OUR LABOR MARKET WOULD BE.

>> Cathy: PROFESSOR BANSAH, YOU'RE IN NORTHFIELD.

ISN'T THE JOB MARKET PRETTY TIGHT IN NORTHFIELD?

>> SURE.

ACTUALLY I LIVE IN LAKEVILLE, BUT OF COURSE I TEACH IN NORTHFIELD, SO, YEAH.

THOSE ARE MY AREAS.

YEAH, THE JOB MARKET HAS BEEN PRETTY TIGHT.

IT HAS IMPROVED A LITTLE BIT BUT MAYBE LIKE A YEAR AGO, PRETTY TIGHT.

COMPANIES COMPLAIN ABOUT THE DIFFICULTY IN TRYING TO GET PEOPLE TO WORK, AND IF YOU HAVE A VERY TIGHT LABOR MARKET IT MEANS THAT WAGES NEED TO GO UP BECAUSE HOW DO YOU ATTRACT SOMEONE TO WORK FOR YOU WHEN EVERYBODY'S LOOKING FOR THE SAME PEOPLE?

SO THAT'S ONE OF THE REASONS WAGES MAY HAVE TO GO UP, WHICH IS GOOD FOR THE WORKER BUT YOU HAVE TO THINK ABOUT EMPLOYERS WHETHER THEY WILL BE ABLE TO PAY THOSE HIGHER WAGES.

IF THEY ARE NOT ABLE TO PAY THOSE WAGES SOME OF THEM MIGHT WANT TO CUT DOWN THEIR OPERATIONS OR EVEN GO OUT OF BUSINESS FOR MAYBE THE MEANTIME.

SO THAT WILL BE SOME.

SO I THINK WHATEVER POLICIES WE ARE LOOKING AT AS WE THINK ABOUT THOSE WHO ARE GOING TO BE RECEIVING THOSE BENEFITS, WE ALSO NEED TO BE THINKING ABOUT THE BUSINESS AND WHETHER THEY CAN AFFORD THOSE.

THERE HAS TO BE SOME KIND OF BALANCE WHEN IT COMES TO THESE POLICIES THAT BENEFIT THE WORKER.

>> Eric: I LOOKED AT YOUR BIOGRAPHY AND IT SAYS YOU'RE AN EXPERT ON THE ECONOMICS OF EDUCATION.

TELL ME MORE.

>> YEAH, WELL, I DO A LOT OF WORK ABOUT TEACHER LABOR MARKETS AND POLICIES THAT AFFECT OUR K12 EDUCATION SYSTEM.

>> Eric: HOW WE DOING THERE?

>> MINNESOTA'S GOT A GREAT EDUCATION SYSTEM, IT'S SOMETHING WE COULD BE PROUD OF AND SOMETHING THAT THE INVESTMENTS THAT WE'VE MADE OVER THE YEARS HAVE REALLY PAID OFF.

>> Eric: BUT THE DIVERSITY, THE GAPS.

>> OH FOR SURE.

>> Eric: ARE AMAZING.

>> YOU TOOK MY NEXT SENTENCE, IT WAS EXACTLY THAT.

BUT THERE'S ROOM FOR IMPROVEMENT AND THERE'S SPACES WHERE WE CAN CLOSE SOME GAPS AND SO WE NEED TO DO MORE TO THINK ABOUT HOW TO GET TEACHERS INTO THE CLASSROOM THAT REPRESENT THE DIVERSITY OF THE CHILDREN IN OUR CLASSROOM.

RIGHT, THERE'S A LOT OF GOOD RESEARCH THAT SHOWS THAT'S AN IMPORTANT DRIVER OF ACHIEVEMENT.

AND I THINK WE JUST WANT TO NOT LOSE SIGHT OF HOW IMPORTANT IT IS TO INVEST IN K K12 OF EDUCATION AND THE TEACHERS THAT DO THAT IMPORTANT FRONTLINE WORK.

>> Cathy: ANOTHER TOPIC HERE WHILE WE HAVE YOU ALL.

IS IT TRUE THAT THE RECESSION IS NO LONGER LOOMING?

I ASK THAT QUESTION BECAUSE NOT MORE THAN THIS WEEK I THOUGHT I HAD THAT STORY BUT I HEARD ANOTHER LITTLE BIT N NATIONAL PUBLIC RADIO THAT THERE MIGHT BE SOME STORM CLOUDS, OR IS THAT INCORRECT?

WHAT IS THIS?

>> IT'S THERE, O I THINK THE LAST COUPLE TIMES I'VE BEEN HERE I'VE SAID ONE IN FIVE.

>> Cathy: YES.

>> I THINK.

AND, YOU KNOW, ANYBODY WHO SAYS THE PROBABILITY IS ZERO IS NOT A VERY GOOD GAMBLER, RIGHT?

THERE'S ALWAYS A PROBABILITY OF SOMETHING.

BUT I STILL THINK THE CHANCE IS PRETTY LOW RIGHT NOW.

BUT, YEAH, THERE'S ALWAYS SOMETHING.

THE HIGHER INTEREST RATES ARE DEFINITELY STARTING TO AFFECT THINGS.

WHEN YOU DRIVE THROUGH DOWNTOWN ST. PAUL OR DOWNTOWN MINNEAPOLIS THOUGH THE CONSTRUCTION IS JUST HEAVY, AND SO IT DOESN'T LOOK LIKE INTEREST RATES ARE BITING VERY HARD THERE.

>> Cathy: PEOPLE SEEM TO BE SPENDING.

>> I WAS AT THE MALL TODAY AND IT WAS FULL.

SO AND I TALKED TO ALL OF THE SALESPEOPLE AND I SAID HOW'S BUSINESS AND THEY SAID IN PARTICULARLY THE MEN'S DEPARTMENT IS HOPPING, PEOPLE ARE BUYING SUITS TO GO BACK TO WORK.

AND I WAS LIKE, OKAY, WELL, THAT'S REALLY INTERESTING.

>> Eric: I SAW VIDEO TODAY FROM A COMPANY CALLED SOMATIC.

IT'S A ROBOT THAT CLEANS TOILETS.

>> MMM.

>> I SAW THAT TOO.

>> Eric: AND I WONDER, ARTIFICIAL INTELLIGENCE, HOW IS THAT GOING TO CHANGE THE U.S. ECONOMY?

>> YES, THE ECONOMY MOVING AT PRETTY MUCH, THERE'S A LOT OF ACTION WHEN IT COMES TO ARTIFICIAL INTELLIGENCE.

SURE, IF YOU DEVELOP ROBOTS ND OTHER THINGS THAT CAN DO THE WORK THAT HUMANS CAN DO, AND IN SOME AREAS WE'RE GOING TO HAVE SOME JOB LOSSES, BUT THERE'S NOT EVERYTHING THAT ROBOTS CAN DO.

SO IT JUST DEPENDS ON THE JOBS THAT MIGHT ALSO ADD.

IT'S NOT ALWAYS JUST ABOUT LOSING JOBS, LET'S SAY CERTAIN EXPERIENCES OR CERTAIN OPPORTUNITIES THAT COME WITH THAT.

>> Eric: SO YOU'RE NOT PRESSING THE PANIC BUTTON.

>> YEAH, SO TO ME THERE WILL BE SOME JOB LOSSES BUT EVEN IN AN ECONOMY WITH SOME JOB LOSSES T DEPENDS ON WHETHER WE ARE RELOCATING THOSE LOSING JOBS TO THE AREAS WE NEED IT.

UNEMPLOYMENT BECOMES A BIG ISSUE ONLY IF WE CANNOT EASILY REALLOCATE PEOPLE BECAUSE MAYBE PEOPLE ARE NOT TRAINED OR THEY ARE NOT WILLING TO DO SO.

BUT WE COULD USE THOSE WHO ARE LOSING JOBS, WE COULD USE THEM IN OTHER AREAS OF THE ECONOMY.

>> Eric: IS COLLEGE EDUCATION GOING TO HAVE TO CHANGE?

>> WELL, I WAS JUST GOING TO SAY IT'S A GREAT AD FOR A LIBERAL ARTS EDUCATION.

IT GIVES YOU THE FLEXIBILITY TO BE ABLE TO MOVE.

YOU DON'T WANT TO TRAIN YOURSELF FOR ONE JOB, YOU WANT TO TRAIN YOURSELF FOR MULTIPLE JOBS AND BE ABLE TO CHANGE JOBS.

A.I.

IS NOT GOING TO TAKE AWAY JOBS BUT IT'S GOING TO CHANGE THE JOBS THAT ARE OUT THERE.

IT'S GOING TO MAKE IT SO THAT THE WORKERS ARE GOING TO DO DIFFERENT THINGS AND SO YOU NEED ADAPTABLE SKILLS AND WE NEED THOSE NVESTMENTS IN EDUCATION THAT GIVE OUR K12 AND OUR HIGHER ED STUDENTS THAT ADAPTABILITY AND ABILITY TO MOVE.

>> Eric: I HEAR THE BELL