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Economic Impacts for the Ag Industry

Dr. David Kohl
Educational Opportunities: 
Grain, Dairy, Swine, Beef
Home > Education & Events > July 2019 > Economic Impacts for the Ag Industry

Let’s talk economics. Now that we're in a record territory for economic expansion in the United States of America; exceeding 120 months. Of course, this is not a global record because Australia is in 27-year economic expansion. But it’s certainly interesting.

Recently, I asked a senior level class at a banking school, where we use clicker technology for anonymous responses, what are some of the aspects that could derail the general economy? You know what number one was? Debt. Federal debt, corporate debt, student debt, and household debt. I can't say I disagree with them. Second, they indicated that the Federal Reserve could create the next recession. We saw a little bit of this last December when they raised rates and all of a sudden, the stock market declined dramatically.  Historically, the fed has been one of the reasons we've had recessions.

Of course our trade deals, whether its trade deals in North America, China or with Europe, it leaves a lot of uncertainty which hurts consumer confidence. All the lead indicators, whether it's the LEI, PMI or consumer confidence, are lead indicators of where the economy is going; boasting a fairly strong economy throughout the summer and into fall.

Turning to the agricultural economy, number one is our trade deals. A piece of advice to all of you is that trade deals will probably be temporary, so don't bet your farm or your ranch or a major expansion on the closure of a major trade deal. The other element is weather, not just here but globally which is creating extreme volatility in the marketplace. What this requires is an extremely proactive plan in management. You've got to plan, you need to strategize, but you also have to execute on that plan and then monitor it.

Above all, manage the things that you can manage and manage around the uncontrollable.
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