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On the edge for better or worse? Status of the General Economy

On the edge for better or worse? Status of the General Economy. Larry D. Sanders March 2011 Department of Agricultural Economics Oklahoma State University. Outline of presentation. Bottom line of links between macroeconomy & rural/agricultural well-being Macroeconomy & agriculture

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On the edge for better or worse? Status of the General Economy

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  1. On the edge for better or worse?Status of the General Economy Larry D. Sanders March 2011 Department of Agricultural Economics Oklahoma State University

  2. Outline of presentation • Bottom line of links between macroeconomy & rural/agricultural well-being • Macroeconomy & agriculture • Macroeconomic status & congressionl constraints—budget & size of govt • Timeline & budgetary resource constraints for next farm bill • Overview of macroeconomic status

  3. Macroeconomy & agriculture--linkages Federal Budget Jobs Ag Industry, Agribusiness, Rural America Global Markets Capital Energy 3

  4. Jobs & the economy… • Jobs: • http://tipstrategies.com/archive/geography-of-jobs/ • http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

  5. How the economy works… • Output = Consumption + Investment + Govt. spending + Net exports • Consumption is improving but still down • Investment is improving but still down… • Net exports up but still negative… • Government spending is propping up the economy, but …

  6. The general economy…

  7. US economic activity, GDP, 1980-2011 http://www.economagic.com/em-cgi/charter.exe/var/rgdp-qtrchg

  8. The Economy, Politics and Perception US Budget Surplus/Deficit ($bil.) Source: US Bureau of Economic Analysis, 2009 (www.bea.gov) http://zfacts.com/p/461.html

  9. Investment in economy by business…

  10. http://www.sjsu.edu/faculty/watkins/USecon10.htm#INVEST

  11. http://www.census.gov/cgi-bin/briefroom/BriefRm

  12. Trade & net exports…

  13. US Ag Trade Balance ($mil/fy) $135.5 b. Exp. $88 b. Imp. http://www.tradingeconomics.com/Economics/Balance-of-Trade.aspx?Symbol=USD

  14. US Agricultural Trade Balance, 1991-2010 ($mil/FY; agricultural product only) F C E A 0 8 WTO F S R I A 0 2 $135.5 b. Exp. F A I R 9 6 NAFTA $47.5 b. surplus $88 b. Imp.

  15. US Agricultural Trade Balance, 1935-2010f ($bil/FY; agricultural product only)*

  16. http://research.stlouisfed.org/fred2/graph/?id=DTWEXM,

  17. What to look for as economy improves or …

  18. Inflation not a general near term issue. • But… begin to plan contingencies • Borrowing cut 10-20%? • Fuel/fertilizer/feed costs hi/higher? http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=USD

  19. If no double-dip recession: • Unemployment returns at slow pace • This will lift consumption • That will increase tax revenue & cut Federal • budget deficit

  20. http://www.businessinsider.com/chart-of-the-day-percent-job-losses-in-post-wwii-recessions-2011-3?utm_source=Triggermail&utm_medium=email&utm_term=Clusterstock+Chart+Of+The+Day&utm_campaign=Clusterstock_COTD_030411http://www.businessinsider.com/chart-of-the-day-percent-job-losses-in-post-wwii-recessions-2011-3?utm_source=Triggermail&utm_medium=email&utm_term=Clusterstock+Chart+Of+The+Day&utm_campaign=Clusterstock_COTD_030411

  21. Net Farm Income & Direct Government Payments (1991-2011f) FCEA 2008 FSRIA 2002 $ Billion $94.7 b. $84.1 b. $10.6 b. 24

  22. Mixed signals in the general economy… State & local budget woes Federal budget deficit woes US slow growth expected thru 2012 US unemployment slowly falling The Fed not ready to raise interest rates Wages remain flat Consumer spending continues to improve US agricultural trade continues to improve Fuel & Food prices high

  23. Afterthoughts … • A “perfect storm” brewing to open the debate over the next farm bill: • Record hi net income predicted this yr • Record hi exports predicted this yr • Record hi food/commodity prices predicted • “Good news” for producers? • Input prices are going up • Anti-ag program groups will use to say farmers don’t need tax payers money any more; “the market is taking care of them” • “the cure for hi prices is hi prices” • Volatility in oil prices could last longer • Weather patterns, esp. precipitation, have returned to more volatile patterns than during the 1980-2000 period • Risk management remains the single most important planning tool for producers • With cuts at fed level & cuts at state level, local economies have yet to see the worst

  24. Thanks for your attention! C 2 0 1 1 Larry Sanders larry.sanders@okstate.edu 405-744-9834

  25. Appendix A tax is a tax, but … High food prices … High fuel prices … Who owns our public debt … The long term debt … Global population growth …

  26. A tax is a tax, but …

  27. Budget Issues - States That Get More in Fed Subsidies Than Pay in Federal Taxes http://voices.washingtonpost.com/ezra-klein/2010/04/the_red_state_ripoff.html

  28. High food prices …

  29. http://www.businessinsider.com/chart-of-the-day-un-food-price-index-2010-12http://www.businessinsider.com/chart-of-the-day-un-food-price-index-2010-12

  30. http://agcompetitiveness.blogspot.com/2011/03/corn-energy-food-and-some-thoughts-on.htmlhttp://agcompetitiveness.blogspot.com/2011/03/corn-energy-food-and-some-thoughts-on.html

  31. Who owns our public debt …

  32. http://www.businessinsider.com/chart-of-the-day-federal-debt-held-by-the-public-2010-8http://www.businessinsider.com/chart-of-the-day-federal-debt-held-by-the-public-2010-8

  33. Who own US debt (2008)? Total debt: $10 tril. (foreign 26%) (other public 22%) (Fed, intragovt 52%) Grand Total 2.6764 tril.

  34. High fuel prices …

  35. http://www.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RCLC1&f=Dhttp://www.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RCLC1&f=D

  36. http://www.eia.doe.gov/dnav/ng/hist/rngc1d.htm

  37. http://www.eia.gov/forecasts/aeo/early_prices.cfm

  38. The long term debt …

  39. http://www.businessinsider.com/chart-of-the-day-bush-policies-deficits-2010-6?utm_source=Triggermail&utm_medium=email&utm_campaign=CS_COTD_063010http://www.businessinsider.com/chart-of-the-day-bush-policies-deficits-2010-6?utm_source=Triggermail&utm_medium=email&utm_campaign=CS_COTD_063010

  40. http://www.businessinsider.com/chart-of-the-day-debt-commision-deficit-projections-2010-12?utm_source=Triggermail&utm_medium=email&utm_term=Clusterstock+Chart+Of+The+Day&utm_campaign=Clusterstock_COTD_120910http://www.businessinsider.com/chart-of-the-day-debt-commision-deficit-projections-2010-12?utm_source=Triggermail&utm_medium=email&utm_term=Clusterstock+Chart+Of+The+Day&utm_campaign=Clusterstock_COTD_120910

  41. Global population growth …

  42. http://www.imf.org/external/pubs/ft/fandd/2006/09/picture.htmhttp://www.imf.org/external/pubs/ft/fandd/2006/09/picture.htm

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