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
CHS St. Paul, MN fertilizer terminal
CropLife 100Farmers Union Oil Co. Votes To Join CHS
September 30, 2016
Eligible voting members of Farmers Union Oil Co., a diversified agricultural retailer based out of Oslo, MN, have cast affirmative Read More
EmployeesOABA Program Develops Future Generation Of Agribusiness…
September 29, 2016
The Ohio AgriBusiness Association will select up to 25 promising leaders to participate in a leadership enhancement program early next Read More
ManagementThoughts on CropLife America and the PSM Appeal
September 29, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about the recent CropLife America annual meeting and the successful appeal of the Read More
Corn Field
Industry NewsMarrone Bio Innovations’ SVP And Chief Sustainability O…
September 29, 2016
Marrone Bio Innovations, Inc., a leading provider of effective and environmentally responsible pest management and plant health products, announced today Read More
Young Corn Field
StewardshipStudy: Ohio Farmers Doing ‘A Good Job Of Managing…
September 27, 2016
Leaders from Ohio’s largest grain farming organizations announced today that Ohio farmers are doing their part in effectively managing phosphorus Read More
Growmark FS Outlet
Industry NewsGROWMARK To Purchase Suncor’s Share Of UPI
September 26, 2016
GROWMARK and Suncor have reached an agreement in which GROWMARK will purchase Suncor’s 50% interest in UPI, Inc. in Ontario, Read More
Corn Field
Eric SfiligojFacing Ag Industry Challenges
September 26, 2016
At the 2016 annual Mid America CropLife Association (MACA) meeting in September, a pair of crop protection company representatives discussed Read More
Syngenta Seedcare Institute
Seed/BiotechSyngenta Opens New North America Seedcare Institute In …
September 23, 2016
Syngenta unveiled its new Seedcare Institute in Stanton, MN, during a recent grand opening celebration. More than 150 industry leaders, Read More
StewardshipMonsanto Invests $1.6 Million In System To Quantify Gre…
September 23, 2016
The USDA – Natural Resources Conservation Service (USDA-NRCS) recently awarded the National Corn Growers Association (NCGA) and its Soil Health Read More
Pipe rack
LegislationCourt Sides With Ag Retailers On PSM
September 23, 2016
The D.C. Court of Appeals has ruled the Occupational Safety and Health Administration violated the Occupational Safety and Health Act when Read More
ManagementPacific Coast Fertilizer Announces Interest In Longview…
September 22, 2016
Pacific Coast Fertilizer LP (PCF) announced at the Cowlitz Economic Development Council board of directors meeting its interest in developing Read More
Young corn plants in soil
UncategorizedCool Planet Raises Additional $9 Million To Commerciali…
September 22, 2016
Cool Planet has announced the first close of a new financing round to commercialize the company’s Cool Terra Engineered Biocarbon Read More
Crop InputsJim Loar Promoted To President And CEO Of Cool Planet
September 22, 2016
In a move that reflects and reinforces the company’s commitment to the agricultural market, the Cool Planet board of directors Read More
BlendersNorth Dakota Coop Debuts Dry Fertilizer Plant
September 22, 2016
North Central Grain Cooperative has begun operations at a new dry fertilizer plant at its Rolla, ND, site. It is Read More
Crop InputsMonsanto, Bayer Officials Defend Proposed $66 Billion M…
September 21, 2016
Top officials for Monsanto and Bayer defended their proposed $66 billion merger before skeptical senators on Tuesday, insisting that the Read More
ManagementUpcoming Shows & Recent Events
September 19, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about upcoming trade shows and events and review the Mid America CropLife Association Read More
Industry NewsVerdesian Life Sciences Appoints New CEO
September 19, 2016
Verdesian Life Sciences, a plant health and nutrition company, today announced that its board of directors has named Kenneth M. Avery Read More
Corn
Crop InputsEPA Settles With Syngenta For Alleged Multi-Regional Pe…
September 19, 2016
The U.S. EPA has announced a multi-region settlement with Syngenta Crop Protection, LLC (Syngenta) in Greensboro, NC, for alleged violations of Read More