larry d. sanders march 2011 department of agricultural economics oklahoma state university on the...
TRANSCRIPT
LARRY D. SANDERS
M A R C H 2 0 1 1D E PA RT M E N T
O F A G R I C U LT U R A L
E C O N O M I C SO K L A H O M A
S TAT E U N I V E R S I T Y
On the edge for better or worse?Status of the General Economy
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 billOverview of macroeconomic status
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3
Ag Industry, Agribusiness, Rural America
Global Markets
Jobs
Energy
Federal Budget
Capital
Macroeconomy & agriculture--linkages
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Jobs & the economy…
Jobs: http://tipstrategies.com/archive/geography-of-jobs/
http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html
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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
The Economy, Politics and Perception
Source: US Bureau of Economic Analysis, 2009 (www.bea.gov) 8
US Budget Surplus/Deficit ($bil.)
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-1600
-1400
-1200
-1000
-800
-600
-400
-200
0
200
400
-330-225-177
-151-50
70124232
268
-157.8
-374-413
-331-314
-162
-455
-1400-1500
-1300
http://zfacts.com/p/461.html
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Investment in economy by business…
10http://www.sjsu.edu/faculty/watkins/USecon10.htm#INVEST
11
12
http://www.census.gov/cgi-bin/briefroom/BriefRm
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Trade & net exports…
http://www.tradingeconomics.com/Economics/Balance-of-Trade.aspx?Symbol=USD
US Ag Trade Balance ($mil/fy)
0
20000
40000
60000
80000
100000
120000
140000
160000
IMPORTS EXPORTS
$135.5 b.
Exp.
$88 b.Imp.
US Agricultural Trade Balance, 1991-2010
($mil/FY; agricultural product only)
0
20000
40000
60000
80000
100000
120000
140000
160000
IMPORTS EXPORTS
WTO
NAFTA
FAIR96
FSRIA02
$135.5 b.Exp.
$88 b.Imp.
$47.5 b.surplus
FCEA08
1935
1938
1941
1944
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
f0
20
40
60
80
100
120
140
IMPORTSEXPORTS
US Agricultural Trade Balance, 1935-2010f
($bil/FY; agricultural product only)*
http://research.stlouisfed.org/fred2/graph/?id=DTWEXM,
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What to look for as economy improves or …
19http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=USD
•Inflation not a general near term issue.•But… begin to plan contingencies• Borrowing cut 10-20%?• Fuel/fertilizer/feed costs
hi/higher?
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If no double-dip recession:Unemployment returns at slow paceThis will lift consumptionThat will increase tax revenue & cut Federal
budget deficit
21http://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
Net Farm Income & Direct Government Payments (1991-2011f)
0
20
40
60
80
100
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
net farm income
govt payments
NFI-G
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$ Billion
FSRIA 2002
$94.7 b.
$10.6 b.
$84.1 b.
FCEA 2008
Mixed signals in the general economy…
State & local budget woesFederal budget deficit
woesUS slow growth expected
thru 2012US unemployment slowly
fallingThe Fed not ready to raise
interest rates Wages remain flatConsumer spending
continues to improveUS agricultural trade
continues to improve Fuel & Food prices high
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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
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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 …
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A tax is a tax, but …
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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
31
32
High food prices …
33http://www.businessinsider.com/chart-of-the-day-un-food-price-index-2010-12
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35
http://agcompetitiveness.blogspot.com/2011/03/corn-energy-food-and-some-thoughts-on.html
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Who owns our public debt …
37http://www.businessinsider.com/chart-of-the-day-federal-debt-held-by-the-public-2010-8
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Who own US debt (2008)?
Foreign owners of US Treasury Securities (July 2008)
Nation billions of dollars percentage
Japan 593.4 22.17%
Mainland China 518.7 19.38%
United Kingdom 290.8 10.87%
Oil exporters 173.9 6.50%
Grand Total 2.6764 tril.
Total debt: $10 tril.(foreign 26%)(other public 22%)(Fed, intragovt 52%)
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40
High fuel prices …
41http://www.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RCLC1&f=D
42http://www.eia.doe.gov/dnav/ng/hist/rngc1d.htm
43http://www.eia.gov/forecasts/aeo/early_prices.cfm
44
The long term debt …
45http://www.businessinsider.com/chart-of-the-day-bush-policies-deficits-2010-6?utm_source=Triggermail&utm_medium=email&utm_campaign=CS_COTD_063010
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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_120910
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Global population growth …
48http://www.imf.org/external/pubs/ft/fandd/2006/09/picture.htm
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