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Economic Outlook 2011 U.S. Economy and Agriculture

Economic Outlook 2011 U.S. Economy and Agriculture. Economic Subject Matter Meetings October 2010 Craig Infanger. Slow Economic Recovery Quarterly Change in U.S. Real GDP. Annualized percent change. June 2009 NBER, 9-20-10. Source: Bureau of Economic Analysis. Agricultural Economics.

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Economic Outlook 2011 U.S. Economy and Agriculture

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  1. Economic Outlook 2011 U.S. Economy and Agriculture Economic Subject Matter Meetings October 2010 Craig Infanger

  2. Slow Economic Recovery Quarterly Change in U.S. Real GDP Annualized percent change June 2009 NBER, 9-20-10 Source: Bureau of Economic Analysis Agricultural Economics

  3. I don’t think anyone fully understands yet how much damage was done to the U.S. economy by the events of September 2008. Daniel Henninger WSJ 9-10-09 Agricultural Economics

  4. Bill Gross Jeremy Siegel Agricultural Economics ● The talk about “the new normal”?

  5. Jobless Recovery Change in Payroll Employment and Unemployment Rate Change from previous month (Thousands) Percent Job Change (Left Scale) Unemployment Rate (Right Scale) Source: Bureau of Labor Statistics Source: Bureau of Labor Statistics Agricultural Economics

  6. Source: Bureau of Labor Statistics Agricultural Economics

  7. 6.3 million long-term unemployed Agricultural Economics

  8. Jobless Recovery Change in Payroll Employment and Unemployment Rate Change from previous month (Thousands) Percent Job Change (Left Scale) 150-200,000 Unemployment Rate (Right Scale) Source: Bureau of Labor Statistics Source: Bureau of Labor Statistics Agricultural Economics

  9. “Jobless recovery” is not good news for rural Kentucky What is the official definition of a “farm”? “any operation that sells at least $1000 of agricultural commodities or would have sold that amount of produce under normal circumstances.” KY = ~ 85,000 “farms” Some simple math about “Jobless recovery” and KY agriculture Agricultural Economics

  10. “Jobless recovery” is not good news for rural Kentucky $22,050 Poverty level income, family of four $100,000 gross sales x .2 = $20,000 ~6,000 farms in KY $41,538 Median household income in KY $207,500 gross sales x .2 = $41,500 ~3,000 farms in KY Some simple math about “Jobless recovery” and KY agriculture Agricultural Economics

  11. Kentucky’s 85,000 farms are dependent on off-farm jobs. >35,000 principal operators worked 200+ days off the farm. “Jobless recovery” is not good news for rural Kentucky

  12. Don’t forget where the financial crisis began… Agricultural Economics

  13. WSJ 9-29-10 RealtyTrac 9-30-10 Agricultural Economics

  14. WSJ 9-29-10 Agricultural Economics

  15. Despite low interest rates, it will take more time to work out the housing mess. Agricultural Economics Herald-Leader 10-15-10

  16. Oct. ’07 3.72% Oct. ’08 0.26% Oct. ’09 0.04% Oct. ’10 0.08%

  17. This cannot be “normal”… Bloomberg BusinessWeek, August 9, 2010

  18. Agricultural Economics

  19. Agricultural Economics

  20. Bailout + Credit Programs + Stimulus =$10T! $14,230,000,000,000 Agricultural Economics

  21. Actual and Projected Federal Budget Surplus and Deficits, FY97-10 Source: CBO Federal Budget Surplus/Deficit 1997-2011 Billions $ Agricultural Economics

  22. Total Debt Held by the Public and Net Interest Costs Billion $ Source: CBO Agricultural Economics

  23. Total Debt Held by the Public and Net Interest Costs Billion $ Source: CBO Agricultural Economics

  24. Outlook for 2011 Agricultural Economics ● Frustratingly low economic growth. ● Jobless recovery for 2-3 years. ● Low interest rates, at least for one more year. ● +/-1.5% inflation, risk of deflation ● Massive federal deficits limit policy options, squeeze programs.

  25. Macroeconomic Impacts on Ag Policy ● Potential political change in the Congress will change Ag Committee leadership. Agricultural Economics

  26. Macroeconomic Impacts on Ag Policy ● Potential political change in the Congress will change Ag Committee leadership. ● Budget deficits will impact current programs and the next Farm Bill. Budget reconciliation in 2011? Traditional coalition between poverty/nutrition groups and farm groups to pass a Farm Bill in 2012? ● Tea Party influence in Congress – serious about taxes and spending? Agricultural Economics

  27. Agriculture: Bright Spot in Economic Recovery

  28. U.S. Agricultural TradeExports rebound to record-high levels Billion $ 115 113 Source: USDA, ERS; fiscal year ending 9/30; p=preliminary Agricultural Economics

  29. “Strong” or “Weak” Dollar? Agricultural Economics

  30. “Strong” or “Weak” Dollar?

  31. U.S. Net Farm IncomeNet Farm Income rebounds strongly in 2010 10-year average: $72 B +24% Source: USDA, ERS Agricultural Economics

  32. KY Agricultural Cash Receipts Livestock Crops Source: USDA, NASS Agricultural Economics

  33. KY Cash Receipts and Net IncomeWill Kentucky follow the trend? $ billion $3.93B $1.37B Agricultural Economics

  34. Outlook for Ag in 2011 ●Will the world and U.S. economies continue to grow? ●“Jobless recovery” will continue to impact KY farmers and rural communities. ●Another year of favorable weather? ●No wildcards in the deck for Ag in 2011? No major food safety issues, trade wars, etc. Agricultural Economics

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