We sometimes think of the Federal Reserve discount rates as immediately affecting the rates charged to consumers for loans of all types, ranging from car loans to 30-year mortgages.  The discount rate is the interest rate the Federal Reserve and other banks charge to depository institutions when lending money overnight, typically to meet their federally mandated reserves. Since the discount rate is a short-term loan rate, an increase in the rate might have quick effect on credit card rates or adjustable-rate mortgages with floating interest rates, but long-term mortgage rates are more directly affected by the 10-year treasury bond rate and other factors, such as supply and demand. 

The Federal Reserve Bank of San Francisco explains, “Changes in the discount rate are made judgmentally rather than automatically and may somewhat lag changes in market rates. The immediate response of market interest rates to a change in the discount rate — the announcement effect — depends partly on the extent to which the change has been anticipated. If rates have adjusted in anticipation of a change in the discount rate, the actual event may have only moderate effects on market conditions.” 

However, rising or receding interest rate tides do tend to lift or lower rates for all loans over time. Eras with higher interest rates have high rates across all loans, and eras with lower interest rates have lower rates across all loans. Despite the rise in rates, we are still in an era with relatively low costs for borrowing. For reference, the current discount rate is 2.50%, up from a historic low of 0.25% in March of 2020. The 1-year Treasury bond was 4.03% at print, and the 10-year Treasury bond was at 3.692%.  

That brings us to today’s quiz, which focuses on 1981, when interest rates were at post-WWII historic highs. Mortgage rates hit a peak high of 18.45% for a brief time in 1981. 10-year treasury bonds hit 15.84% on September 30, 1981, and 1-year treasury bonds hit a yield of 16.87% on August 24, 1981.   

The Federal Reserve discount rate also hit a high in 1981.  How high did the discount rate go, and which month in 1981 marked that high?

A. 19.88% in January 
B. 17.10% in April
C. 14.00% in June
D. 18.45% in August 
E. 5.67% in December  

You're invited to the 2022 Northwoods Economic Development Summit at Nicolet College.The summit will kick off with a town hall meeting featuring special guest, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis. After the town hall, UW Extension’s Economic Development Administration University Center will take the stage to share the latest local data on the Northwoods economy, focusing on workforce development, entrepreneurship, changes in late-pandemic consumer expectations, and the next wave in community economic development. This event is sponsored by Grow North, The Lac du Flambeau Band of the Lake Superior Chippewa Indians, Nicolet College, Baylake Regional Planning Commission and North Central Wisconsin Regional Planning Commission, and the University of Wisconsin Extension. There is no cost to attend the event.

The movement of employees to remote work due to the COVID-19 pandemic has been well-documented.  Indeed, the Census Bureau recently reported that the number of people working primarily from home tripled between 2019 and 2021.  This shift certainly caused hardship among some employees but was widely embraced by many others. With the World Health Organization noting that the pandemic is nearing its end, employees, businesses and communities face questions regarding the future of remote work. How many workers might continue working from home?  Will permanent shifts to remote work create further impacts on real estate markets, employment centers and businesses that rely on office workers for revenue? Can communities use their assets to attract remote workers? Could fewer in-person interactions impact worker productivity or knowledge spillovers?  This Lunch-N-Learn will offer insights into these questions and provide additional perspectives on remote work.

The eleventh annual series of Small Community Forums will be held in four locations in October and November, to allow residents in these communities to come together, address common issues, network, share best practices, and identify strategies to address shared concerns. Representatives from many state and regional resource partners will be on hand to connect with attendees and provide guidance on specific concerns introduced during the sessions.

UW-Madison Division of Extension Community Food Systems Program is organizing a 2-day virtual summit for Wisconsin food entrepreneurs! The 2022 FEED Summit will be held virtually on November 14th and 15th, from 10 am to 4 pm. The Community Food Systems Program's Food Entrepreneurship Ecosystem Development (FEED) Initiative is a statewide program that promotes food entrepreneurship training and network development for value-added producers and individuals facing structural barriers to food entrepreneurship. Early bird registration starts at $45 for participants and at $65 for Exhibitors. All are welcome to this learning, connecting, and promotional space to help your food business THRIVE!

The University of Minnesota-Extension is offering a business succession course open to all. Whether your exit is three years or three decades away, every business owner needs an exit strategy. UW-Extension's five-week online course will guide you through a business succession planning process to learn, leverage and plan for your transition. When it's time to hand over the keys, you and the future leaders of the business will be ready.

During the online course, you will:
-Build your knowledge and the ability to create your business succession strategy.
-Learn with other business owners.
-Learn about the different options available to transition your business.
-Prepare a formal comprehensive succession plan.

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