Ag Economist: U.S. Economy In A Period Of Recovery

After what’s been called the worst recession since the 1980s, Purdue University agricultural economist Larry DeBoer says the economy is now in a period of recovery.

"When Ben Bernanke, the chairman of the Federal Reserve, or any economist says the recession is over, we mean the economy is not declining any more," DeBoer says. "Think of it in terms of digging yourself into a hole. When you stop digging deeper it’s a significant change."

Another significant change is to climb back out of the hole. DeBoer says the economy likely will stay in the hole for a little while, however.

"The recovery is going to take quite some time to bring us back to where we really want to be," DeBoer says. "We should probably expect a slow decline in the unemployment rate and probably slow growth rates of gross domestic product (GDP)."

GDP is a basic measure of the country’s overall economic output.

DeBoer said consumer spending in the U.S. is being held back by the 10 percent unemployment rate. The economy grew 5.9 percent in the fourth quarter of 2009. Economists question whether that growth rate can be sustained.

"Even at 5.9 percent, the unemployment rate would only come down from about 10 percent to about 8.5 percent by the end of the year," DeBoer says. "This tells me we have at best three or four years before we get unemployment back down to 5 percent — where it was at the beginning of the recession."

An increase in consumer spending would help decrease the unemployment rate, but with unemployment being what it is, consumers are not spending, DeBoer says.

DeBoer says the Federal stimulus package has played a role in keeping the unemployment rate lower than what it could have been.

"The whole idea behind stimulus is to step in temporarily, fill in the hole and add to the spending. There’s no doubt that the spending from the stimulus package has kept the unemployment rate from going up more than it would have," he says. "Without the stimulus, the unemployment rate might have been 11 or 12 percent instead of 10 percent."

Because the value of the U.S. dollar is low, foreign countries are buying more American products. Added exports should help bring down the unemployment rate.

DeBoer says markets in Asia are recovering more quickly than the markets in the U.S., and that is partly because China has experienced exceptional economic growth.

"A recession in China means instead of growing 8 percent or 10 percent, the economy grows 6 percent or 8 percent," he says. "It really is unprecedented in the history of the world. Never have 1.3 billion people seen their economy grow as fast as they’ve grown over recent decades."

DeBoer said the recovery does have implications for American agriculture, which would likely be most affected by interest rates, farmland assessments, and oil prices.

With a 10 percent unemployment rate and little threat of inflation, DeBoer said it’s unlikely the Federal Reserve will increase interest rates soon. But farmland assessments are likely to increase in the near future, because the formula to assess farmland value takes into account commodity prices with a four-year lag.

"Farmland assessments are going to go up over the next several years because the high commodity prices from 2007-08 will enter the assessment formula," DeBoer says. "Senate Bill 396 is still alive in the legislature, and it would take the edge off some of those increases, but not stop them. I think farmers can count on property tax increases over the next several years."

Leave a Reply

Latest News
EquipmentPrecision Tank & Equipment: 50 Years Of Growing
October 4, 2015
Looking out onto the production floor of the fiberglass/stainless steel tank manufacturing facility in Ligonier, IN, David Hemming, president/CEO for Read More
Syngenta Sign
Crop InputsScience & Strategy Spur Syngenta’s Crop Protection …
October 3, 2015
Developing a crop protection portfolio is a lot of science and a little serendipity. “There are a number of things Read More
Dan Schaefer and Jason Solberg IFCA
StewardshipIllinois Fertilizer & Chemical Association: Tacklin…
October 2, 2015
You’ve got to be doing something right if lots of people keep coming to you for advice. That’s what’s happening Read More
LegislationFall Fertilizer Transportation Could Be At Risk With Po…
October 1, 2015
Failure by Congress to extend the deadline for the implementation of Positive Train Control (PTC) on the railroads could gridlock Read More
Weed ResistancePPO Resistant Pigweed Hits The Mid-South
October 1, 2015
If you’re a soybean grower already entangled in troublesome weed resistance in the state of Arkansas, Mississippi or Tennessee, you Read More
Weed ResistanceManagement Strategies That Worked In 2015
October 1, 2015
For better or worse, throughout many regions of the country 2015 provided the optimal growing season conditions for both crops, Read More
ManagementAn Update On CropLife America’s Meeting & The Outlo…
October 1, 2015
Editors Paul Schrimpf and Eric Sfiligoj review last week’s CropLife America Annual Meeting and how crop protection companies believe next Read More
Patriot 4440 Sprayer close up
Weed ResistanceManaging Herbicide-Resistant Weeds: The Importance Of ‘…
October 1, 2015
As the problem of herbicide-resistant weeds has spread, crop protection product suppliers have charged their top researchers with coming up Read More
Adjuvants loading
Weed ResistanceAdjuvants Trending Up For Fighting Weed Resistance
October 1, 2015
Gone with the wind are the days when adding an adjuvant to the spray tank was looked at with major Read More
Case sprayer nozzle closeup
Weed Resistance8 Best Management Practices For Spray Drift Control
October 1, 2015
Dr. Robert Wolf, Wolf Consulting & Research, LLC, Mahomet, IL, is one of the leading experts in drift management strategies. Read More
EquipmentUSC Releases New U-BATCH Treater
October 1, 2015
U-BATCH is one of the most versatile batch treaters on the market today, according to USC. Capable of treating most Read More
Southern States Co-op Storefront
CropLife 100Southern States: Always Ag Authentic
October 1, 2015
If people were to judge a book by its cover when visiting Southern States Cooperative’s (SSC) Richmond, VA, corporate headquarters, Read More
Industry NewsVerdesian Life Sciences Names New Vice Presidents For P…
September 30, 2015
As farmers seek advanced, innovative ways to keep their operations profitable and efficient, companies must rise to the challenge to Read More
Tim Glenn, Dupont Crop Protection
Crop InputsDuPont Crop Protection Appoints New President
September 30, 2015
DuPont has named Timothy P. Glenn as president of its Crop Protection business effective October 1, succeeding Rik Miller who Read More
Industry NewsYargus Expands Sales Force With Two Hires
September 30, 2015
Renee Sauvageau and Mike Etter have joined the Yargus Manufacturing, Inc. Sales Team, as Territory Sales Managers. Renee joined Yargus Read More
BlendersYargus Introduces New Layco Rotary Drum Blenders
September 28, 2015
Yargus has introduced the new 13- and 16-ton capacity Rotary Drum Blenders that have one of the highest capacities in Read More
Eric SfiligojMACA Young Leaders Speak
September 28, 2015
For the past several years, one of the highlights of the annual Mid America CropLife Association (MACA) meeting is hearing Read More
Screen capture of this week's Retail Week video featuring CropLife Editor Eric Sfiligoj and Executive Editor Paul Schrimpf as they examine the Ohio Farm Science Review and the CropLife 100.
ManagementOhio FSR Report And The Allure Of The iPad
September 24, 2015
Ohio Farm Science Review learnings and a CropLife 100 challenge from Editors Paul Schrimpf and Eric Sfiligoj in this edition Read More