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“Trumping” the Economy and Agricultural Policy

“Trumping” the Economy and Agricultural Policy. Outlook Update February 2017 Larry D. Sanders. The bottom line…. Dec 2016: General economy in pretty good shape Ag economy at crossroads facing crisis or resurgence. 2017: Tug/pull between Trump and Fed Regulation relaxation

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“Trumping” the Economy and Agricultural Policy

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  1. “Trumping” the Economy and Agricultural Policy Outlook Update February 2017 Larry D. Sanders

  2. The bottom line… • Dec 2016: • General economy in pretty good shape • Ag economy at crossroads facing crisis or resurgence • 2017: • Tug/pull between Trump and Fed • Regulation relaxation • Trade, foreign economies, energy markets & weather uncertain

  3. Leaving 2016 behind • Consumer spending and Gross Domestic Product are at record levels, while Federal government spending is down • GDP growth rate last quarter 3.2% • GDP debt to GDP remains high (104%) • Wage and salary growth have recovered from the 2008 meltdown (4.3%) • Federal deficit has declined • Inflation rate remains relatively low (1.6%; food price deflation) • $ has strengthened • Unemployment is down and more jobs are being created • U rate 4.6% • Interest rates low (0.5%) • Commodity prices are down after record years

  4. The General Economy in 2017:Tug/pull between new President, Federal Reserve, Congress & key trading partners • Fiscal stimulus: increase inflation • Monetary policy: limit inflation & slow growth in GDP • Deficit likely to increase • Foreign capital attracted to US investments • $ strengthens • Trade deficit increases • Unemployment may increase • Standard of living likely declines • Farm asset values likely decline and farm income will shrink • Reduced staffing in federal farm offices such as FSA and NRCS • Suggests longer waits/more difficulty to get assistance, benefits

  5. US Net Farm Income & Direct Government Payments (1991-2016F) $ Billion REVISED (113016) $66.9 b. $54 b $12.9 b. Note: OK producers received $1 bil. in direct govt. payments in 2014.

  6. US Infrastructure: a focus for public-private funding (As much as $3.6 trillion needed by 2020) http://www.infrastructurereportcard.org/a/#p/grade-sheet/americas-infrastructure-investment-needs

  7. https://www.washingtonpost.com/graphics/national/maps-of-american-infrastrucure/?hpid=hp_hp-top-table-main_gfx-infrastructure-320pm%3Ahomepage%2Fstoryhttps://www.washingtonpost.com/graphics/national/maps-of-american-infrastrucure/?hpid=hp_hp-top-table-main_gfx-infrastructure-320pm%3Ahomepage%2Fstory

  8. U.S. Agricultural Trade Lower Bulk Export Prices and Greater Export Competition 152.3 134 Records 114.2 112.5 Exports 43 Imports Trade Surplus Updated by Sanders

  9. http://www.fas.usda.gov/data/trade-agreements-create-opportunities-us-agriculturehttp://www.fas.usda.gov/data/trade-agreements-create-opportunities-us-agriculture

  10. 2016: GOP Red; Dem Blue Cartogram: map re-scaled according to vote within counties https://www.washingtonpost.com/2016-election-results/us-presidential-race/?hpid=hp_hp-bignews4_map-desktoppromo%3Ahomepage%2Fstory https://www.washingtonpost.com/graphics/politics/2016-election/how-election-maps-lie/

  11. Trump Policies Related to Ag & Rural America? • Limit immigration • Kill TPP; revisit all in-force trade agreements, esp. NAFTA • Kill/revisit climate change agreements • Expand infrastructure programs (roads/bridges) • Reduce regulations • Eliminate or reduce EPA • Separation of farm programs and food/nutrition programs in next farm bill • With exception of Defense and ICE, general reduction of government—it will be smaller

  12. The next farm bill… 2018…2019…2020…??? • 2014 farm bill was a 5-yr bill expected to last thru 2018 • Discussions have begun • Risk management continues to be the framework--crop insurance focus • Maintain omnibus concept or split off food programs? • Specialty crops and conservation as compromise issues? • The “Team” that will write/move the farm bill SENATE HOUSE Pat Roberts (R-KS) Michael Conaway (R-TX) Debbie Stabenow (D-MI) Collin Peterson (D-MN)

  13. Oklahoma “A rose by any other name would smell as sweet” -- William Shakespeare, Romeo and Juliet

  14. The Budget

  15. Total Appropriations Source: Oklahoma Policy Institute, “Oklahoma State Appropriations, FY 2007 to FY 2017,” http://okpolicy.org/resources/online-budget-guide/expenditures/state-government-expenditures/appropriations-history/, Accessed 2/1/17 @ 3 pm

  16. Miller, Ken. 2017. “Oklahoma Economic Report: News and Analysis of Oklahoma’s Economy.” Accessed online https://www.ok.gov/treasurer/documents/OER_1-31-17.pdf on February 2, 2017 @ 1:30pm

  17. Miller, Ken. 2017. “Oklahoma Economic Report: News and Analysis of Oklahoma’s Economy.” Accessed online https://www.ok.gov/treasurer/documents/OER_1-31-17.pdf on February 2, 2017 @ 1:30pm

  18. http://www.infrastructurereportcard.org/oklahoma/oklahoma-overview/http://www.infrastructurereportcard.org/oklahoma/oklahoma-overview/ Source: American Society of Civil Engineers, “2013 Report Card for America’s Infrastrucutre: Oklahoma.” http://www.infrastructurereportcard.org/oklahoma/oklahoma-overview/, Accessed 2/3/17 @ 11:29 am

  19. Economics of budget decline

  20. Source: Wilkerson, 2017

  21. Unemployment Rates, December 2016 Source: Wilkerson, 2017

  22. Unemployment Rates, November 2016 Source: Wilkerson, 2017

  23. Source: Wilkerson, 2017

  24. Payroll Employment by Industry Source: Wilkerson, 2017

  25. Selected Housing Indicators *Percent change year-over-year. Source: Wilkerson, 2017

  26. Exports Source: Wilkerson, 2017

  27. Manufacturing Activity Source: Federal Reserve Bank of Kansas City, 2017

  28. What might the future hold?

  29. Source: Wilkerson, 2017

  30. Oil (WTI-Cushing) Prices Source: Energy Information Agency, “Daily Prices.” Accessed online http://www.eia.gov on 2/3/17 @ 11:45 am $53.55/barrel 2/2/17

  31. Natural Gas (Henry Hub) Prices Source: Energy Information Agency, “Daily Prices.” Accessed online http://www.eia.gov on 2/3/17 @ 11:45 am $3.12/MMBtu 2/1/17

  32. Source: Wilkerson, 2017

  33. Source: Energy Information Agency, “West Texas Intermediate (WTI) Crude Oil Price Probabilities.” Accessed on http://www.eia.gov/forecasts/steo/images/Probability_WTI.png 2/1/17 @ 10:15 pm.

  34. Source: Energy Information Agency, “Henry Hub Natural Gas Price Probabilities.” Accessed on http://www.eia.gov/forecasts/steo/images/Probability_HH.png2/1/17 @ 10:15 pm

  35. Sources • Wilkerson, Chad. 2017. “The Oklahoma Economic Databook: A summary of regional economic indicators for the state of Oklahoma.” Accessed online https://www.kansascityfed.org/~/media/files/publicat/research/indicatorsdata/regionaldatabook/2017/2017-01-24-okrdb.pdf on 1/30/17 @ 11:24 am • Federal Reserve Bank of Kansas City. 2017. “Tenth District Manufacturing Activity Continued to Expand Moderately.” Accessed online https://www.kansascityfed.org/~/media/files/publicat/research/indicatorsdata/mfg/2017/2017jan26mfg.pdf?la=en on 1/30/17 @ 11:15 am

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