Slowly, but surely, the Midwest is climbing out of its economic slump in the wake of 2020. Still, it remains to be seen if factors such as high inflation and rising gas prices are signs of rockier seas ahead.

That was a recurring theme at the Midwest Economic Forecast Forum hosted by the Wisconsin Banking Association. Headlining the event was Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, and David Kohl, a professor emeritus on ag finance and an agricultural economist.

Discussions covered everything from land acquisitions to cryptocurrencies, but largely focused on economic recovery.

“The economy went through a very rapid shutdown, partially by government mandate, but also just by individuals, families and businesses taking effort to protect themselves,” Kashkari said. “Now, the economy has been trying to reopen and recover from that. I think the recovery is well under way, but it’s been uneven and there’s still some big gaps. Different sectors have been affected differently.”

Much of this unevenness can be attributed to factors like federal stimulus, localized shutdowns, a sudden increase in home shipping — as well as associated shipping breakdowns — and labor shortages. In general, the U.S. economy took a notable shift from services to goods, which isn’t surprising considering that services often require face-to-face interactions and social occasions.

Kashkari noted that, while the nation’s gross domestic product has bounced back and the stock exchange is humming along, there still remains a 4-6 million employee shortage, while many businesses, communities and families are still struggling to find their feet again.

If there is a concerning development to keep an eye on, it’s skyrocketing inflation. Kashkari admitted that, while he expected inflation to occur, its sudden rise and sustained climb has been far beyond his initial expectations. If the Federal Reserve and the U.S. economy isn’t able to curb inflation, it could spell trouble down the road in the form of an economic recession.

But, Kashkari remained optimistic. It’s no longer a question if high inflation will happen, he said, it’s a question if high inflation is a long-standing trend, or just a temporary bump in the road.

“I’ve been strongly in the camp of we think it’s going to be transitory,” Kashkari said. “I think that as the COVID problem passes, as the economy returns back to normal, there should not be a permanent change in the inflation rate that we’ve been seeing. I think that it should go back to the low inflation that we saw prior to the pandemic. I don’t see why we wouldn’t revert back to the low inflation regime we’ve had for more than 20 years as result of trade, technology and demographics.”

Kohl said there will likely be many economic disruptions across the globe in the years ahead as the international economy shifts from a globalist phase, which has dominated for 50-60 years, into a de-globalist phase.

“They’re disruptors, they’re challenges to your businesses,” Kohl said of these potential trends, “but they also relate to opportunity.”

Among these emerging trends is the rise of agricultural export markets, which now account for $1 out of every $5 made by agriculture. He also pointed to shifts in energy production — where rising gas prices are at the forefront in a power struggle between the West and OPEC — and noted that the United States’ divestment in fossil fuels may make it more vulnerable to Russian interests.

There’s also labor shortages and automation to consider. As for the former, Kohl noted it’s been a chronic issue that’s only grown worse with the pandemic, while automation could remove as much as 30% from the job market — mostly in low-level, mundane labor — by the year 2030. As such, labor shortages may be mitigated, but some jobs will likely remain in plentiful supply.

While the pandemic remains a powerful force in American society, now powered by the Omicron variant, Kohl said it’s also likely that federal intervention remains a prominent feature of the economy. As of now, 14% of the United States’ $85 trillion economy is stimulus of one kind or another.

While cryptocurrencies are slowly emerging as something economists need to consider, Kohl pointed out that, ironically, aging agriculturists — who hold the lion’s share of farm wealth and purchasing power — are leaning into tangible forms of capital as the new decade unfolds. Land acquisition is an increasingly popular decision in this demographic, he noted, and the decision is often framed as a legacy to be left for future generations to depend on.

Climate change will complicate these trends, just as it will complicate most every aspect of human civilization this century. Then, Kohl said, there is always the possibility for “Black Swan events,” or seismic events that can’t be predicted with any semblance of certainty. The emergence of COVID-19 is one such example, while Kohl said a crippling cyberattack could be another.