It’s mid-July and that means summer festival time throughout our great state. I’m thinking about two festivals this weekend. Here in the Twin Cities today is the start of the Minneapolis Aquatennial. Here is where you can learn more about this 4-day celebration of summer water and summer fun: http://www.aquatennial.com/. Tonight is the Torchlight Parade. Hopefully, there will be a few Twins fans lining the streets, watching the floats, and celebrating a victory over the New York Yankees. Here is another festival, this time in Greater Minnesota. The town of Houston in Southeast Minnesota is hosting the SubOctave Music Festival from July 20-22. Here is where you can learn more about SubOctave: http://www.suboctavemusicfestival.com/. It’s a funky music line-up in Houston that includes bands like “Aliens at Work” and “Trnstyl.” How can you not have fun with bands like that?
And, yes, there’s big business news with global, national and local implications. Here’s an example. in the last year, the US dollar has dropped in value against most major foreign currencies, especially the foreign currencies of our biggest trading partners like Canada (-6.2%), Mexico (-15.3%), China (-2.8%). Here’s where you can learn more about this trend: https://qz.com/1032062/the-us-dollar-sinks-to-its-weakest-level-in-10-months-as-the-trump-administration-hits-into-new-lows/. The greenback’s slide took a big one-day slip earlier this week when US Senate Republicans pulled their proposed replacement for the Affordable Care Act also known as Obamacare. Foreign currency traders see this policy failure as the latest economic policy misstep by the Trump Administration and their Republican legislative supporters. Failing on healthcare has knock-on effects for any tax reform, defense and infrastructure spending initiatives, all of which were aimed at upping US economic growth. The expectation of higher economic growth had pushed up the US dollar. Now the growth expectations are lower, so the dollar is going lower. That’s good news for Minnesota exporters, whether they be agricultural, manufacturing, or service-oriented. The dollar’s slide should take a little pressure off of Trump to impose steel tariffs that would hurt many of those same Minnesota businesses.
The demise of the Senate Republican healthcare bill doesn’t seem to be hurting big healthcare insurers like Eden Prairie-based United Health Group (UHG). Here is where you can learn more about UHG’s latest quarterly earnings, which are up 30% over last year’s numbers –not bad at all! UHG posted earnings of $2.28 billion, or $2.46 a share, up from $1.75 billion, or $1.81 per share, in the same period a year ago. Revenue rose 7.7 percent to $50.05 billion — a bit slower growth than in the past since the company doesn’t have exchange business since backing out of most of them last year. UHG seems to be negotiating uncertainties in healthcare insurance with profitable panache. And it doesn’t hurt that UHG is on a path to reaping revenues of the same size ($200 billion) as the GDP of Morocco. This is one big, profitable firm in the healthcare space.
Here’s another growing Minnesota healthcare insurer: Medica. And Medica sees growth in getting into state healthcare exchanges in the Midwest even as UHG exits from them. Here is where you can learn more about Medica’s interest in expanding (not contracting) its presence in Wisconsin: http://www.startribune.com/medica-wants-to-expand-in-wisconsin/434961013/. Medica has signaled its intention to increase its footprint in Wisconsin by eight counties,” the insurer said in a statement Monday. The individual market is the source of health insurance primarily for people under age 65 who are self-employed or don’t get health insurance through their employer or a government program. Medica isn’t the only insurer contemplating expansion on state exchanges. Blue Cross and Blue Shield are considering a return to many Iowa counties in 2018 with some modest regulatory changes. The state exchanges merit a good look for reform so that we can give patients more insurance choice, especially in rural counties. But when you read about Medica and others in expansion mode, it brings to mind a version of Mark Twain’s quote that reports of Obamacare’s death are greatly exaggerated.
The Trump Administration has laid out its overall goals for re-negotiation of the North American Free Trade Agreement (NAFTA) in a 18-page summary published this week. Here’s where you learn more about NAFTA issues for re-negotiation: http://www.latimes.com/business/la-fi-nafta-trump-objectives-20170717-story.html. Remember that NAFTA has linked the US, Canada and Mexico in a free trade pact for nearly 25 years. And during that time, US trade with both countries has tripled to more than $1.2 trillion. That’s trillion with a t. The big bugaboo in the 18-page summary seems to be eliminating trade deficits with Canada and Mexico. They are substantial. For example, the trade deficit with Mexico was $64 billion in 2016. In fact, the US runs a deficit with most of our major trading partners. So why is the US economy still humming along with record low (since 2007) unemployment and steady growth? That’s because Mexican firms (and Canadian firms and other foreign firms) don’t just sit on those dollars. They re-invest them in the US by buying our corporate and government debt, and by building new plant, property and equipment. This provides US workers and firms with new, productivity- and innovation-enhancing capital. NAFTA could probably use a make-over after 25 years. But let’s not get too hung up on trade deficits when we give it that make-over. There are plenty of other issues to work on first.
This week was “Made in America Week” at the White House. Each state had successful businesses with products on display in and around the White House. I was so pleased to see that Faribault, Minnesota-based Faribault Woolen Mills was there. And I loved that Faribault Woolen Mills employee Mary Boudreau was there with the current CEO Tom Kileen. Mary has worked at the mill for more than 63 years! Here’s where you can read about Mary and her White House turn: http://www.startribune.com/faribault-woolen-mill-represents-minnesota-in-white-house-event/435215603/. The Faribault Woolen Mill has been making woolen products since the Civil War. The mill shut down briefly in the mid-2000s, but was revived by the Mooty family in 2009. Full disclosure –members of the Mooty family also endowed my faculty chair at the University of Minnesota. Fuller disclosure –I’m a Mary Boudreau fan. Way to go, Mary!