Ernie Goss Lower Quotations

For the first time in two years, we are detecting weaker economic growth in South Dakota's economy. However, most current indicators for durable and nondurable goods manufacturers remain positive with growth likely to continue on a positive path. The growth for 2006 will be lower than that for 2005.

It's clear the overall economy is solid and pointing to growth in the upcoming months, much stronger than anticipated earlier because of energy prices and natural gas prices. We would have expected much slower growth.

While our inflation gauge and most national inflation indicators point to somewhat lower inflationary pressures ahead, I expect the Federal Reserve Open Market Committee to raise interest rates at its next meeting on Jan. 31. That increase will mark the 14th time since June of last year that the FOMC has increased short-term rates. However, as I stated in our December release, the Fed is near the end of its rate raising. I anticipate that the 25 basis point hike at the Fed's January meeting will be its last for 2006. Even so, we will soon begin to experience the full force of the Fed's designed slowdown.

After growing at a very strong pace in 2005, we are now detecting a slowdown in the pace of growth. Just as nondurable goods manufacturers reported improving economic conditions, durable goods producers detailed a pullback in economic conditions for the month. I expect this slower pace of growth to continue into 2006.

As we have seen in the past few months, our inflation gauge, and most national inflation indicators, point to somewhat lower inflationary pressures ahead.

For most states in the region, unemployment rates moved lower and job growth higher as manufacturers, finance firms and energy providers details growth. However, telecommunications remained weak and construction cooled in January.