This week in 1991, one of the strangest pieces of album cover art in music history was created. Nirvana’s album cover for Nevermind, conceived by lead singer Kurt Cobain as he watched a documentary about live water births, featured a photo of a naked baby in a swimming pool reaching for a one-dollar bill on a hook.  

While the album itself ushered in the era of grunge music and became one of the best-selling albums of all time—the song “Smells Like Teen Spirit” alone ranks as the fifth greatest song of all time—the cover continues to receive attention. It now sits in the Museum of Modern Art. The baby in the picture, Spencer Elden, recently turned 31 years old. He has even recreated the picture several times as he’s aged (clothed this time around, thankfully).

This month’s economic indicators are a little like that—clothed and looking back. That’s because things are getting a little retro. No, we're not talking about the grunge era, but rather the disco era, the late 1970s, when inflation (stagflation, as the kids used to say) was heating up at the rate of 7% to 13% annually.   

Unfortunately, we’re in the same territory in 2022. April’s inflation rate was 8.3%, and calls for interest-rate hikes are coming from across the board. So while it’s interesting to tell you that across the Rapid City region sales are up by 8% over last year, unemployment is still at historic lows, and wages continue to look strong (all true), it’s with a caveat and question we’ve been describing for months. And the question is this: can the Fed raise interest rates enough to tame inflation, while leaving them low enough to keep us out of a recession? 

We know how things ended in the 70s, which is not very well. Soaring prices, job losses, and a housing crash. Can we avoid the same fate in 2023? Some think the Fed can thread the needle and raise rates by about 1% over the next nine months while delivering a slightly softer housing market for buyers. Main street businesses, on the other hand—at least 80% of main street businesses, to be precise—think otherwise.

This is when we are tempted to say the answer is probably somewhere in the middle. And we think we’re right. There’s reason to be optimistic about Rapid City’s situation regardless of the national economy. For starters, the B-21 is happening without regard for interest rates. Secondly, there’s some sense that Rapid City’s huge upswing in home prices won’t continue unabated but won’t crash either. That’s at least according to the Wall Street Journal, which ranks Rapid City #1 in the country for its new Emerging Housing Markets Index. This index measures amenities, affordability, growth, and economic vitality. Third, because it’s an ecosystem unto itself, the Black Hills has managed to avoid huge, massive downturns in the past while the rest of the world was burning.