The cost of goods and services has been steadily rising. St. Cloud State University economist King Banaian appeared on WJON. He says wages are keeping up with inflation, but that has consequences. Banaian believes that if wages rise too much, interest rates will remain higher for a longer period of time because the Federal Reserve will not cut rates because they feel inflation is not going fast enough. He expects interest rates to stay roughly flat, but have come down a bit in the past few weeks. Banaian doesn't expect interest rates to fall significantly between now and the end of the year. For inflation to change and return to 2%, he says, there must be zero change in prices. Banaian said prices have been rising 0.2% per month recently.
What is the wealth gap in this country? That's a question I asked Banaian. He says the county has a number called the poverty rate that identifies poor people. Banaian believes that people who earn between $30,000 and $32,000 a year are likely at the poverty level. This is based on the income of a family of four. Banaian thinks the number is much lower for single people. He says you need to earn more than $15 an hour to get above the poverty level. What does it take to be wealthy in central Minnesota? Banaian thinks the number is more than $150,000 a year.
Banaian believes middle-class Americans are getting higher wages, and by 2024, there will be more dual-income households than there were 20 or 30 years ago, he says. He suggests that people are working harder than ever before and have less leisure time, but they value it more.
King-Banaian also weighed in on St. Cloud State's finances and summer travel for Minnesotans. Watch our conversation below: