With all the economic gloom the past few months, we're ready for a message with a silver lining. I believe it's arrived and none too soon.
Economists across the country are predicting the general economy will begin expanding by midyear — or sooner.
“There are several reasons to be bullish about ag, too,” says Dave Kohl, Soybean Digest's trends editor and ag economist from Virginia Tech:
- Interest rates at a 30-year low
- Continued government support
- Reduction of oil prices
- Strong land prices
- Healthy farm debt and capital positions
Sung Won Sohn, chief economic officer at Wells Fargo & Co., who's ranked as one of the top five U.S. economists by Bloomberg News, agrees. He pinpoints the recovery from the current recession by the second half of this year.
“This will be one of the mildest recessions we've had in the post-war period,” Sohn says. “For example, a popular measure, the jobless rate, is about 5.8% (at press time). In 1982, after one of the deepest recessions in the post-war period, the jobless rate almost hit 11%. In 1992, after the Gulf War, the rate was almost 8%.”
Sohn also claims that despite what you might think, “consumer confidence and the American economy are a lot more resilient than we give them credit for.”
When you look around, that's almost hard to believe until you listen to his rationale. He points to the $40 billion in tax cuts and tax rebates provided before Sept. 11. Then after the attacks, the government supplied a $40 billion bailout package (airlines, New York rebuilding, etc.) and now the pending economic stimulus program that could pump an additional $75-100 billion into the economy.
Still another reason for his bullish optimism focuses on what he calls the oil tax cut. In 2000, crude oil was $32 a barrel, mostly in the form of additional OPEC taxes. Now, the price is anywhere from $18 to $22 a barrel. That shift alone means consumers have a whopping $100-150 billion more in buying power — an especially bright spot for farmers.
So let's hope the experts are accurate and we'll indeed climb out of the recession quickly. We're poised and ready.