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
West Central Trucking
MicronutrientsWest Central Obtains Exclusive U.S. Rights To Distribut…
December 1, 2015
West Central Distribution has partnered with ATP Nutrition Ltd for the exclusive rights to distribute ATP proprietary products for sale Read More
PerfectMatch Herbicide infographic
Crop InputsDow AgroSciences Introduces New Spring Wheat Herbicide
December 1, 2015
Spring wheat growers no longer will have to settle for incomplete weed control. PerfectMatch herbicide — a new, convenient broadleaf Read More
Zinc Close-Up
Crop InputsVivid Life Sciences Explores Early Field Trial Results
December 1, 2015
Early results from Vivid Life Sciences’ replicated summer field trials are showing the benefits of managing micronutrients to improve plant Read More
Seedling Closeup
Industry NewsCroda Acquires Innovative Seed Enhancement Company Inco…
December 1, 2015
Croda International Plc, a speciality chemical manufacturer behind some of the biggest, most successful brands in the world today announces Read More
Eric SfiligojThe End Of The World In Agriculture As We Know It?
December 1, 2015
A few years back, there was plenty of apprehension as 2012 drew to a close. Many people were convinced that Read More
CropLife 100CHS, MKC Consider Second Grain Terminal In Milan, KS
November 30, 2015
CHS Inc., an energy, grains and food company and the nation’s leading farmer-owned cooperative, and MKC, a full-service farm cooperative Read More
Dow AgroSciences Logo wall
HerbicidesGowan Co. To Acquire DNA Herbicides From Dow AgroScienc…
November 30, 2015
Gowan Co. has entered into a definitive agreement to acquire the entire global dinitroaniline (DNA) herbicide portfolio from Dow AgroSciences Read More
Palmer pigweed in soybean stubble
Herbicides‘Back to the Future’ Weed Control: Herbicide Outlook 20…
November 30, 2015
What’s new for herbicides in 2016? Well, not much, but the learning process is sure to continue for fine-tuning resistance Read More
Tim Hassinger Dow AgroSciences President and CEO
HerbicidesDow Expects Enlist Duo To Be Available For The 2016 U.S…
November 30, 2015
Relative to EPA’s recently filed motion to vacate the registration of Enlist Duo herbicide, The Dow Chemical Co. is confident Read More
HerbicidesBREAKING: EPA Pulls Registration On Dow’s Enlist …
November 25, 2015
EPA on Wednesday withdrew approval of a controversial new weed killer to be used on genetically modified corn and soybeans, Read More
FertilizerYara Tampa Ammonia Terminal Garners ResponsibleAg Honor…
November 25, 2015
Yara has received its first ResponsibleAg Certification for its Tampa, FL, Ammonia terminal location. This achievement demonstrates Yara’s commitment to Read More
ManagementReviewing The Top Ag Stories For 2015
November 24, 2015
Editors Eric Sfiligoj and Paul Schrimpf discuss the most noteworthy events from this past year in agriculture. Read More
EmployeesAgriculture Jobs May Be Plentiful, But New Grads Are Sc…
November 24, 2015
Close to 60,000 jobs are set to open up in agriculture each year for the next five years, but there's not enough grads to fill them. Read More
Radish cover crop
StewardshipCover Crops Guide Helps Growers Improve Water Quality
November 23, 2015
A publication that teaches growers the advantages of using cover crops to improve soil health and crop yields has won Read More
Crop InputsThe Andersons’ Products Receive California Organi…
November 23, 2015
The Plant Nutrient Group of The Andersons, Inc. announced today that its Humic DG and Black Gypsum DG products are Read More
Eric SfiligojNew European Study Seems To Support Glyphosate Safety
November 23, 2015
Looking at any international news over the past few years, it might seem as if the European Union (EU) is Read More
Toggle Biostimulant corn roots
Crop InputsTwo New Biostimulants Added To United Suppliers’ …
November 20, 2015
Winfield US announces the launch of two new products in the United Suppliers portfolio for the 2016 crop season, Optify Read More
StewardshipNRDC Report: Cover Crops Contain Vast Benefits
November 19, 2015
As harvest season ends and farmers in the United States ready themselves for winter, one small change could make a Read More