SCHULTZ, AND TAKE A CLOSE LOOK AT ELECTIONS IN OLMSTED COUNTY WITH KAOMI LEE.

>> CATHY: BUT FIRST, LOTS OF ECONOMIC NEWS THIS WEEK.

MINNESOTA ADDED NEARLY 14,500 JOBS LAST MONTH, THE LARGEST INCREASE IN MORE THAN TWO YEARS.

BUT THAT NEWS IS ECLIPSED A BIT BY THE BIG FEDERAL RESERVE MOVE EARLIER THIS WEEK.

FOR THE FIRST TIME IN FOUR YEARS, THE FED HAS CUT INTEREST RATES.

THE HALF-POINT REDUCTION COMES IN RESPONSE TO FALLING INFLATION RATES AND NATIONAL JOB NUMBERS THAT REMAIN GENERALLY STABLE BUT ARE THREATENING A SLOWDOWN IN THE LABOR MARKET.

JOINING US TO MAKE SENSE OF ALL OF THIS IS ECONOMIST LOUIS JOHNSTON.

HE TEACHES ECONOMICS AT THE COLLEGE OF ST. BENS AND ST. JOHN'S UNIVERSITY.

IN THE COLLEGEVILLE ARE.

THANKS FOR COMING DOWN 94.

GOOD TO SEE YOU AGAIN.

SAY, I WANT TO -- THE QUOTE WAS FROM THE FED HAIRMAN.

WE'RE NOT SAYING MISSION ACCOMPLISHED.

>> NO.

>> Cathy: NO.

IT'S BEEN, HE SAYS, INFLATION'S NOT BEEN COMPLETELY WRESTLED TO THE GROUND AND IT REALLY HASN'T BEEN COMPLETELY VANQUISHED, IS THAT A PROBLEM?

>> YEAH, IT IS A PROBLEM AND THAT'S WHY I WAS SURPRISED THAT THEY CUT RA RATES HALF A PERCENT BECAUSE THE FED WANTS TO GET INFLATION DOWN TO ITS TARGET RATE OF 2% AND RIGHT NOW IT'S 2.5.

AND THAT MIGHT BE TOO, DEPENDING ON THE MEASUREMENT AND THOSE KINDS OF THINGS AND I THOUGHT THEY MIGHT ERR ON THE SIDE OF CAUTION.

BUT LAST TWO MONTHS UNEMPLOYMENT NUMBERS AT THE FEDERAL LEVEL, MADE THEM GO AHEAD FOR THIS I THINK, BECAUSE UNEMPLOYMENT STARTED TO RISE.

THE LABOR MARKET LOOKS A LITTLE BIT WEAKER.

AND SO THEY WANTED TO TAKE OUT SOME INSURANCE.

>> Eric: THE NEXT MEETING IS THE DAY AFTER THE LECTION I THINK.

>> YES.

>> Eric: ARE THEY GOING TO DO SOME MORE CUTTING?

>> WE DON'T KNOW YET.

I THINK IT'S GOING TO DEPEND ON THE UNEMPLOYMENT ABOUT ERRS THAT COME IN, THE INFLATION NUMBERS THAT COME IN OVER THE NEXT SIX WEEKS.

AND THEN THEY ALSO HAVE SOMETHING CALLED THE BEIGE BOOK.

THEY GO OUT AND THEY SURVEY PEOPLE.

THEY'RE GOING TO TAKE ALL OF THAT INFORMATION AND ASK, WHERE ARE WE T. >> Cathy: SAY, DO WE KNOW, WHAT DOES RESEARCH SHOW ABOUT THE ECONOMIC IMPACTS IF A DEMOCRAT WINS THE WHITE HOUSE VERSUS A REPUBLICAN?

>> THEY'RE OVERRATED, BASICALLY.

IT DOESN'T REALLY MATTER WHO'S IN THE WHITE HOUSE IN TERMS OF PRESIDENT.

WHAT MATTERS IS MORE WHAT HAPPENS 20 YEARS LATER, OR 10 YEARS LATER.

THOSE EFFECTS OF A PRESIDENTIAL ADMINISTRATION DON'T TEND TO SHOW UP UNTIL, YOU KNOW, THEY'RE LONG GONE, FOR EXAMPLE, OBAMACARE, ITS EFFECTS AREN'T SHOWING UP REALLY DEEPLY UNTIL NOW.

IF YOU THINK ABOUT THE TAX REFORM THAT PRESIDENT REAGAN AND CONGRESS DID IN THE MID-'08S.

THAT DIDN'T SHOW UP UNTIL THE 1990s.

>> Cathy: SO NOTHING SHORT TERM.

>> NO.

>> Cathy: THE TRUMP ERA TAX CUTS ARE GOING TO EXPIRE NEXT YEAR.

>> THAT IS THE ISSUE ON THE TABLE, I THINK.

FOR CONGRESS AND FOR WHOEVER BECOMES THE PRESIDENT, BECAUSE IF THOSE EXPIRE, THEN YOU'RE GOING TO HAVE TAX RATES GO UP.

AND THAT'S GOING TO MESS PEOPLE'S PLANNING UP.

ON THE OTHER HAND, IF YOU KEEP THEM, YOU'RE GOING TO BE RUNNING HUGE BUDGET DEFICITS FOR AS LONG AS THEY STAY IN.

SO YOU'VE GOT A DILEMMA ON YOUR HANDS.

WHICH WAY ARE YOU GOING TO GO?

AND WHAT I'M WORRIED ABOUT IS WHERE IS THE WILLINGNESS TO COMPROMISE?

WHERE'S THE WILLINGNESS TO THINK ABOUT, ALL RIGHT, HOW DO WE SPLIT THIS DIFFERENCE?

I DON'T SEE IT YET.

>> Eric: WELL, BOTH OF THE PRESIDENTIAL CONSISTENTS ECONOMIC PLANS, BOTH INCREASE DEBT AND DEFICIT PRETTY REMARKABLY, RIGHT?

>> YES, AND IT'S VERY FRUSTRATING.

THEY BOTH DO THAT AND THEY DON'T TAKE THAT BORROWING AND USE IT FOR SOMETHING PRODUCTIVE.

IN A SENSE, THEY'RE BASICALLY BORE WROAMPING TO PAY FOR TRANSFER PAYMENTS, LIKE SOCIAL SECURITY AND THINGS LIKE THAT OR DEFENSE SPENDING OR INTEREST ON THE DEBT.

THOSE ARE THE THREE BIGGEST CATEGORIES NOW.

WELL, YOU DON'T GET MUCH FOR THAT UNLESS YOU REALLY THINK A WAR IS IMMINENT, THEN INVESTING IN DEFENSE MAKES SENSE.

>> Eric: GOING BACK O THE RATE CUT, IMMEDIATE IMPACT ON HOME MORTGAGE LOANS?

>> YOU SHOULD START SEEING IT.

CREDIT CARDS, DEPENDS ON WHAT YOUR CREDIT IS.

>> Cathy: THOSE MINNESOTA NUMBERS, THEY DON'T LOOK BAD.

>> NO, THEY'RE QUITE GOOD.

WE HAVE THE HIGHEST LABOR FORCE PARTICIPATION RATE IN THE NATION.

SO WHOEVER IS EITHER GOT A JOB OR IS LOOKING FOR A JOB, THAT IS THE BIGGEST PERCENTAGE OF THE POPULATION OF ANY STATE.

THE UNEMPLOYMENT RATE ISN'T THE LOWEST IN THE NATION, BUT IT'S PRETTY DARN LOW.

>> Eric: 3.3?

>> I'D TAKE IT OVER ALMOST ANYBODY ELSE.

THAT 14,000 JOB NUMBER, IT'S JUST ODD.

EVEN THOUGH WE SEASONALLY ADJUST, I JUST START TO THINK IS THAT SOMETHING TO DO WITH SUMMER OR SOMETHING LIKE THAT?

BUT I LOOK AT THE OVERALL TREND.

THE MONTH TO MONTH ISN'T THAT IMPORTANT.

OVERALL, WE CONTINUE TO HAVE A JOB MARKET HAT'S EXPANDING.

WE HAVE A LABOR MARKET WHERE WAGES ARE GROWING STRONGLY.

>> Cathy: WHY ARE SOME PEOPLE WORRIED ABOUT A RECESSION?

>> I DON'T KNOW, TO BE BLUNT.

I DON'T HINK YOU SHOULD BE.

I JUST DON'T SEE THAT ON THE HORIZON RIGHT NOW.

THERE JUST -- THERE ARE JUST NOT THAT THOSE KINDS OF STORM CLOUDS ON THE HORIZON.

>> Eric: WE ALWAYS