SCSU’s Banaian; Recession Could Still Happed in 2026

Fertilizer and food prices is the big concern for St. Cloud State economist King Banaian.  The war between the United States and Iran has caused gas prices to go up and while that is still a concern, Banaian believes fertilizer and food prices could be moving up as a result of the war as well.  He says much of the world's fertilizer is exported through the Strait of Hormuz and that fertilizer can't make it's way to it's destination.

Fertilizer and Food

Banaian says the fertilizer farmers need for 2027 is being ordered now and the price is extremely high.  He suspects some farmers may choose to not plant next year and instead take the payment for conserving their land for a year.  Banaian thinks that might be a better option for some farmers.  He believes if there is a resolution to the conflict in the middle east, that this problem could be fixed relatively soon.

Signs of Recession

Banaian believes there is a 25-30% chance of a recession in the last quarter of 2026. He says the job market has remained "pretty robust", but not as active, with just a few layoffs.  Indicators of a recession include a slow down in travel, slow down in new car purchases, mortgage rates at a high level, a slow down in construction, and apartment vacancies.

Local Economy

Banaian feels the economy locally is soft but he's recently seen signs of recovery.  He says the summer has improved economically from a rough start to the year.

If you'd like to listen to my conversation with King Banaian, click below.