State Economic Development Bulletin – Issue 51, November 2022

State Economic Development Bulletin 


Economic Performance 

Slowing U.S. Inflation Rate Raises Hopes Cost of Living Crisis May Have Peaked (The Guardian)

U.S. Economy Returned to Growth Last Quarter, Expanding 2.6 Percent (Politico)


Economic Outlook

Fed Seen Slowing Rate Hike Pace as Inflation Eases (Reuters)

As The Fed Raises Rates, Worries Grow About Corporate Bonds (The New York Times)

Global Financial System Under Pressure from All Sides, Fed Report Says (The Washington Post)

Tremors In Treasury Bonds Worry Wall Street and Washington (The Washington Post)


SEDE News 

SEDE Hosts Meeting for Top Executives

SEDE Member Spotlight: Joan Goldstein

Upcoming SEDE Webinars



U.S. Treasury Finds No Currency Manipulation by Major Trading Partners (Reuters)

U.S. Treasury Chief Janet Yellen Pitches for A Global Trade Route Away from China (The Economic Times)


Industry Trends

U.S. Solar Tax Credits Hike Factory Activity but Supply Lines Limit Growth (Reuters)

There’s A Major Shift Underway in Manufacturing for U.S. Companies (CNBC)

Tech Industry Squeezed by U.S.-China Rift: “The Music Is Going to Stop” (Axios)

More Women Are Suddenly Working in Construction (Washington Post)



Health Care, Education, Food Service: A Data Snapshot of Job Departures (U.S. News)

A Closer Look at A Hot Labor Market (Brookings)


Finance And Incentives

Treasury Seeks Public Input on Clean Energy Tax Provisions of the IRA (U.S. Treasury)

$8.28B Available for Investments in CDFIs and MDIs (U.S. Treasury)

Minnesota Receives $15 Million To Boost Meat Processing (Minnesota Department of Agriculture)

Georgia County Begins Work On $40m Rural Fiber Expansion (Government Technology)

UMOS Receives $56.9 Million Grant to Help Agricultural Workers (Milwaukee Journal Sentinel)



Economic Performance  

Slowing U.S. Inflation Rate Raises Hopes Cost of Living Crisis May Have Peaked (The Guardian) The lower-than-expected U.S. inflation rate in October raised the prospects of a shallower recession next year across the industrialized world, but the increased demand for government debt sent bond prices higher. The U.S. Bureau of Labor Statistics reported in October that the 12-month annual inflation as measured by the consumer prices index fell to 7.7% – the lowest since January, when it was 7.5%. The core inflation rate, which excludes the volatile energy and food sectors, halved month over month. Last week the Fed increased rates for the sixth time since March, making borrowing money through credit card use and mortgages more costly. Fed Chair Jerome Powell said the Fed would slow rate rises at some point, but it was still “very premature to think about pausing.”


U.S. Economy Returned to Growth Last Quarter, expanding 2.6 Percent (Politico) The U.S. economy grew at a better-than-expected 2.6 percent annual rate from July through September. Stronger exports and steady consumer spending, backed by a healthy job market, helped restore growth to the world’s biggest economy. Consumer spending, which accounts for about 70 percent of U.S. economic activity, expanded at a 1.4 percent annual pace while exports shot up at an annual pace of 14.4 percent.



Economic Outlook 

Fed Seen Slowing Rate Hike Pace as Inflation Eases (Reuters) A larger than expected drop in consumer inflation last month will likely prompt the Federal Reserve to pare down future interest rate increases as the impact of its swift monetary tightening this year begins to take hold. After raising rates more sharply this year than at any time since the 1980s, including four straight 75-basis-point rate hikes that brought the policy rate to a 3.75%-4% range as of last week, the Fed is now seen shifting to a half-point rate hike next month and quarter-point hikes after that. Rate futures contracts are now pricing in a top policy rate in the 4.75%-5% range next March — lower than the 5%-plus range seen before the report — and interest-rate cuts in the second half of the year.


As the Fed Raises Rates, Worries Grow About Corporate Bonds (The New York Times) As the Federal Reserve raises interest rates to tame inflation, the corporate bond market has been hammered particularly hard. The yield on bonds issued by solid businesses is now about 6 percent, about twice as much as it was a year ago. That number indicates how high an interest rate that rock-solid corporations would have to pay to borrow more money right now; rates are even higher for smaller businesses or those that investors consider risky. Before rates jumped, companies borrowed at a rapid pace, with even lower-rated firms selling more new bonds in 2021 than in any other year. But that flow has turned into a trickle as interest rates have risen and investors have grown more discerning. In what Moody’s calls its “moderately pessimistic scenario,” the default rate among corporate bonds below the top tier “investment grade” rating will climb to 7.9 percent in September 2023 from 2.3 percent in September of this year, well above the historical average. That could lead many companies to file for bankruptcy and lay off workers.


Global Financial System Under Pressure from All Sides, Fed Report Says (The Washington Post) Fresh threats are complicating the Federal Reserve’s aggressive campaign to tame some of the highest inflation in 40 years, the central bank warned Friday. Chief among these risks is rising volatility in financial markets, diminishing liquidity for government bonds and geopolitical tensions worldwide. “Today’s environment of rapid synchronous global monetary policy tightening, elevated inflation, and high uncertainty associated with the pandemic and the war raises the risk that a shock could lead to the amplification of vulnerabilities, for instance due to strained liquidity in core financial markets or hidden leverage,” said Fed Vice Chair Lael Brainard. Still, the banking system appears stable and household debt has not emerged as a major source for concern. Prices of risky assets have fallen as the economic outlook has deteriorated and interest rates have risen.


Tremors in Treasury bonds worry Wall Street and Washington (The Washington Post) The market for U.S. Treasury bonds has lately displayed a level of volatility not seen since the beginning of the pandemic-related crisis in 2020. The market is drawing increased attention out of concern there may at some point not be enough buyers of debt issued by the U.S. government. With prices falling, yields on 10-year Treasury bonds have already risen from less than 1.5 percent to roughly 3.8 percent this year. (Bond prices and bond yields move in opposite directions.) A dearth of buyers could cause a ripple effect by forcing down the price of bonds. A sell-off of U.S. Treasurys could give investors further leverage to demand higher returns, or yield, on their bond purchases. That would mean higher prices for all kinds of financial instruments pegged to those rates. It would also drive up the cost to the governmental entities of financing debt.



SEDE News 

SEDE Hosts Meeting for Top Executives. The State Economic Development Executives (SEDE) Network is building on the success of the June 2022 meeting by holding a Winter 2023 meeting for state leaders in New Orleans. The meeting will begin at noon on Monday, February 27th and conclude at noon on Tuesday, February 28th, 2023.  SEDE Steering Committee Vice-Chair Don Pierson and the Louisiana Economic Development team are hosting the meeting and have scheduled a tour of the NASA Michoud Assembly Facility. The agenda will include discussions of hot issues facing states and many opportunities for networking among the state economic development commissioners, secretaries and executive directors or their top deputies. More information and registration forthcoming.


SEDE Member Spotlight: Joan Goldstein has been a leader in the SEDE Network since its inception and is currently on the SEDE Steering Committee.  She has been Commissioner of the Vermont Department of Economic Development since April of 2015 when she was appointed by Democratic Governor Peter Shumlin and subsequently reappointed by Republican Governor Phil Scott. Joan has particular interest in advancing the state’s entrepreneurial activities and has built a multi-talented team of professionals with varied expertise across sectors including financial, technology, media, small business, and government. Prior to her appointment to commissioner, she spent six years as Executive Director of the Green Mountain Economic Development Corporation (GMEDC). Before moving to Vermont from New York City 17 years ago, Joan spent many years in the financial services industry at JP Morgan and Credit Suisse in a variety of international sales, marketing, client relationship, and project management roles. Joan presently serves and has previously served on many municipal, nonprofit, and for-profit boards including Selectboard, Gifford Health Care, Vermont Institute of Natural Science, and Mascoma Bank. In her leisure time, she enjoys spending time with family, cooking, and travel. She has traveled extensively to over 35 countries.   She currently lives in Shelburne, VT with her husband, Mark, and they have a grown son, Evan, who resides in Cambridge, MA.


Upcoming SEDE Webinars. Several SEDE webinars are in development addressing topics including incentives (December 7), CHIPS Program Office activities (December 8), and supply chains (TBA January 2023).  Please visit the SEDE website to learn more about these exciting upcoming SEDE Network webinars.




U.S. Treasury Finds No Currency Manipulation by Major Trading Partners (Reuters) The U.S. Treasury Department in a semi-annual report reported that no major U.S. trading partner manipulated its exchange rates to gain an unfair competitive advantage. “Treasury is cognizant that a range of approaches by developing and emerging economies to global economic headwinds may be warranted in certain circumstances,” said Treasury Secretary Janet Yellen. The report noted that Switzerland once again exceeded U.S. thresholds for possible currency manipulation under a 2015 U.S. trade law but refrained from branding it – or any other country – a currency manipulator.


In First Trip to India, US Treasury Chief Janet Yellen Pitches for A Global Trade Route Away from China (The Economic Times) U.S. Treasury Secretary Janet Yellen has pitched a new version of global trade, calling for ‘like-minded countries’ to work together to reduce the world’s dependency on ‘risky countries’ like China. “For too long, countries around the world have been overly dependent on risky countries or a single source for critical inputs,” Yellen said during her first trip to India as Treasury Secretary. In proof of what Yellen has termed “friendshoring,” Western companies have already begun shifting production from China to countries like India and Vietnam, in a bid to reduce dependency on China.




Industry Trends

U.S. Solar Tax Credits Hike Factory Activity but Supply Lines Limit Growth (Reuters) The Inflation Reduction Act (IRA) has spurred several announcements of new solar manufacturing facilities, but far more is required to match growth expectations. The IRA includes new tax incentives designed to spur domestic manufacturing, including a 30% Investment Tax Credit (ITC) and a production tax credit (PTC) that is product specific. Tax credits for solar builders have been extended by ten years. Developers will need access to lower-cost Asian products until U.S. manufacturing is scaled up. The IRA incentives should reduce the price gap with Asia, according to Kevin Smith, the CEO for the Americas at developer Lightsource bp. “We are paying a premium for our U.S. supply, but that gap is narrowing, and the IRA tax framework should make domestic prices even more competitive,” Smith said.


There’s A Major Shift Underway in Manufacturing for U.S. Companies (CNBC) A new survey from SAP finds more than half (51%) of U.S. companies expect the supply chain to remain challenging into 2023. The findings from the German software giant paint a picture of a supply chain that will remain in rapid flux for the U.S. economy. Many U.S. companies are now shifting from a “just in time” supply chain model to a “just in case” model — essentially carrying more inventory and often use of more suppliers closer to the United States as opposed to reliance on Chinese manufacturing. This shift is expected to increase costs while U.S. consumers are also dealing with historic inflation. With the disruption of the Covid pandemic easing, U.S. businesses now say the war between Russia and Ukraine is the top factor causing supply chain disruption. Issues related to the European conflict, lack of raw material/ components and rising fuel/energy costs were the other top factors listed by companies.


Tech Industry Squeezed by U.S.-China Rift: “The Music Is Going to Stop” (Axios) The new round of U.S. efforts to slow China’s access to semiconductor technology went further than many people expected. And more restrictions are seen as likely. The tech industry once drove a wider movement to tie the world’s economies together. Now it’s becoming a victim of larger forces that are tearing them apart. Experts say it’s also a cautionary tale for companies who still have a big dependency on China, either as a market for their products or as part of their supply chain. The new rules go further than past ones to limit China’s access to chips and to chipmaking technology, as well as preventing U.S. citizens from working on key technology that is sold to China. The U.S. has made overtures to Japan and European allies seeking to get them to follow suit and suggested that additional restrictions on China’s access to other key technologies could also be on the table.




Health Care, Education, Food Service: A Data Snapshot of Job Departures (U.S. News) While industries across America are dealing with staffing shortages, Americans are leaving their jobs at historic rates. What does that mean for industries that support the nation’s public health? Registered nurses – as well as physicians and surgeons – switched occupations (3%) or stopped working (4%) at some of the lowest rates among all categories, indicating that shortages in nurse staffing may have more to do with factors like increased demand on health care providers and a shortage of people entering the workforce. On the other hand, licensed practical and vocational nurses departed at higher rates, along with combined emergency medical technicians and paramedics; nursing, psychiatric and home health aides; and physician assistants. Generally, higher-paying occupations tended to fare better in retaining their employees than lower-paying jobs across these occupational realms, with highly paid medical personnel staying in their roles at much higher rates than their counterparts in the education and food service spaces. Among the occupations with the highest rates of departures, most fell below a median income of $50,000 annually.


A Closer Look at a Hot Labor Market (Brookings) This recent Brookings study provides evidence that the job openings-to-hires and job openings-to-net hires ratios are worthwhile additions to the list of indicators that assess the state of the labor market. The analysis finds that most industries are in a “high need” state: the job openings-to-hires ratio hit a historic high in April 2020 and remains elevated in almost every industry. But some evidence suggests that job openings tend to move more than hires, such that an increase in hires is associated with a proportionally large increase in job openings. The research also suggests that a high job opening-to-unemployment rate ratio overstates how hard it is for firms to hire, i.e., how tight the labor market is.



Finance and Incentives

Treasury Seeks Public Input on Additional Clean Energy Tax Provisions of The Inflation Reduction Act (U.S. Treasury) The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today issued three additional notices requesting public input on key climate and clean energy tax incentives in the Inflation Reduction Act. In addition to these notices requesting public comment, the Department has also been hosting a series of roundtable discussions with key stakeholder groups representing thousands of companies, millions of workers, and trillions of dollars in investment assets, as well as climate and environmental justice advocates, labor unions, community-based organizations, and other key actors that are critical to the success of the Act.


$8.28B Available for Investments in Community Development Financial Institutions and Minority Depository Institutions (U.S. Treasury) Secretary of the Treasury Janet L. Yellen announced that the Department of the Treasury has made over $8.28 billion of investments in 162 community financial institutions across the country through the Emergency Capital Investment Program (ECIP). These funds will support the efforts of community financial institutions to provide loans, grants, and other assistance to small and minority-owned businesses and consumers, especially in low-income and financially underserved communities that struggled during the COVID-19 crisis. These dollars are in addition to funding some CDFIs received from states through the State Small Business Credit Initiative (SSBCI).


Minnesota Receives $15 Million To Boost Meat and Poultry Processing (Minnesota Department of Agriculture) The State of Minnesota is receiving $15 million from the United States Department of Agriculture to establish a revolving loan program that will support small and medium-sized meat and poultry processors. The new Meat and Poultry Revolving Loan Fund will be available through the Minnesota Department of Agriculture’s (MDA) Rural Finance Authority. The fund will offer low-interest loans for the start-up, expansion, or operation of slaughter and value-added meat and poultry processing. Loans of up to $10 million will be available at a 3% fixed interest rate with a term of up to 10 years. Funds can be used to purchase land or equipment, cover start-up costs, and make other business investments. Repayments will seed a revolving loan fund and be made available to new borrowers.


Georgia County Begins Work On $40M Rural Fiber Expansion (Government Technology) Lowndes County, Ga., announced the start of a $40 million multi-year project to bring high-speed fiber optic Internet service to thousands of the county’s rural residents. Of the $40 million price tag, Windstream is putting up $18 million while state grants will cover the remaining $22 million, said Michael Force, who oversees Windstream operations in Georgia. The project aims to provide broadband Internet access to 18,000 homes in rural Lowndes County that are “unserved or underserved.” Work on the fiber optic system is slated to start in 2023 with a deadline set by Gov. Brian Kemp of 2026, Force said. The project involves 900 miles of fiber optic lines and no copper lines.


UMOS Receives $56.9 Million Grant to Help Agricultural Workers (Milwaukee Journal Sentinel) Milwaukee-based UMOS has been given a grant worth nearly $56.9 million from the United States Department of Agriculture to assist roughly 75,000 farm workers and meatpackers nationwide, including more than 14,000 in Wisconsin. The grant includes a one-time payment of $600 to be paid to more than 75,000 eligible applicants nationwide within a two-year period, according to the announcement made Friday.  UMOS and its partners plan to outreach to employers of farm workers and meatpacking workers, accept and process applications, collect verification, determine eligibility, and issue payments. UMOS says it plans to “maintain strong financial controls to ensure funds get into the hands of eligible workers and will use an elaborate database system to avoid payment duplication for those who migrant and work throughout several states.”





The State Economic Development Executives (SEDE) Network engages in regular events throughout the year. State Economic lists these activities and offers an interactive forum for discussion among peers. The website is currently undergoing some minor reorganization including adding resources on how state and local economic development districts can align strategies and collaborate on activities.


The SEDE Steering Committee includes: Sandra Watson (AZ), Chair; Don Pierson (LA), Vice-Chair; Mike Preston (AR); Kurt Foreman (DE); Kevin McKinnon (MN); Christopher Chung (NC); Alicia Keyes (NM); Michael Brown (NV); Andrew Deye (OH); Sophorn Cheang (OR); Adriana Cruz (TX); Joan Goldstein (VT); Lisa Brown (WA) and Mike Graney (WV).


Leif Olson of the Center for Regional Economic Competitiveness (CREC) led the development of this Bulletin; for questions on the content in this Bulletin or for information on the SEDE Network contact Bob Isaacson, CREC Senior Vice President.