Last week my Road Warrior travels sent me to the financial power center of the world: New York City. Actually, I was on the other side of the Hudson River in Jersey City to address the 2009 Northeast Farm Credit Conference. My tenure with this group goes back to the mid-1970s to Cape Cod when I first spoke to the group while in graduate school at Cornell.
This year one of the keynote speakers was Mark Zandi, chief economist at Moody’s Economy.com, Inc. When I am on the road working out, I often observe Zandi being interviewed on my favorite early morning business channel, CNBC. Zandi indicated that the recession is over and that policymakers need to keep interest rates low for an extended period, well into next year, to keep the U.S. economy in a recovery mode.
He also stated that if policymakers had not used quantitative easing, i.e. printing money, and buying treasury securities to the extent of over $1 trillion, then fixed-rate long-term financing would be 1% higher, moving from 5% to 6%. His major concern is rumblings by the Federal Reserve on some levels to start raising interest rates at a rather rapid rate as an exit strategy, which could quickly stall economic recovery.
Over the next year, early 2010 into 2011, he felt the recovery would slow with considerable headwinds. Next time we will discuss more of his thoughts.
Trivia: Can you name the first and second largest population age groups?
Answer: Age 50 and age 20. Zandi recommended watching the business and economic habits of 50- and 20-year-olds because they will likely be trend setters in consumption, investing and risk taking. They are truly the “pig in the python.”
Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at [email protected].