1. LARRY D. SANDERS MARCH 2011 DEPARTMENT OF AGRICULTURAL ECONOMICS OKLAHOMA STATE UNIVERSITY 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 bill Overview of macroeconomic status 2

3. 3 3 Ag Industry, Agribusiness, Rural America Global Markets Jobs Energy Federal Budget Capital Macroeconomy & agriculture--linkages

4. Jobs & the economy… Jobs:  http://tipstrategies.com/archive/geography-of-jobs/ http://tipstrategies.com/archive/geography-of-jobs/  http://cohort11.americanobserver.net/latoyaegwuekwe/mult imediafinal.html http://cohort11.americanobserver.net/latoyaegwuekwe/mult imediafinal.html 4

5. 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 … 5

6. The general economy… 6

7. US economic activity, GDP, 1980-2011 7 http://www.economagic.com/em-cgi/charter.exe/var/rgdp-qtrchg

8. The Economy, Politics and Perception Source: US Bureau of Economic Analysis, 2009 (www.bea.gov) 8 US Budget Surplus/Deficit ($bil.) http://zfacts.com/p/461.html

9. Investment in economy by business… 9

10. 10 http://www.sjsu.edu/faculty/watkins/USecon10.htm#INVEST

11. 11

12. 12 http://www.census.gov/cgi-bin/briefroom /BriefRm

13. Trade & net exports… 13

14. http://www.tradingeconomics.com/Economics/Balance-of-Trad e.aspx?Symbol=USD US Ag Trade Balance ($mil/fy) $135.5 b. Exp. $88 b. Imp.

15. US Agricultural Trade Balance, 1991-2010 ($mil/FY; agricultural product only) WTOWTO NAFTANAFTA FAIR96FAIR96 FSRIA02FSRIA02 $135.5 b. Exp. $88 b. Imp. $47.5 b. surplus FCEA08FCEA08

16. US Agricultural Trade Balance, 1935-2010f ($bil/FY; agricultural product only)*

17. http://research.stlouisfed.org/fred2/graph/?id=DTWEXM,

18. What to look for as economy improves or … 18

19. 19 http://www.tradingeconomics.com/Economics/Inflation-CPI.as px?Symbol=USD Inflation not a general near term issue. But… begin to plan contingencies Borrowing cut 10-20%? Fuel/fertilizer/feed costs hi/higher?

20. 20  If no double-dip recession:  Unemployment returns at slow pace  This will lift consumption  That will increase tax revenue & cut Federal budget deficit

21. 21 http://www.businessinsider.com/chart-of-the-day-percent-job-losses-in-post-wwii-recessions-2011-3?utm_sourc e=Triggermail&utm_medium=email&utm_term=Clusterstock+Chart+Of+The+Day&utm_campaign=Clusterstoc k_COTD_030411

24. Net Farm Income & Direct Government Payments (1991-2011f) 24 $ Billion FSRIA 2002 $94.7 b. $10.6 b. $84.1 b. FCEA 2008

25. Mixed signals in the general economy… State & local budget woes Federal budget deficit woes US slow growth expected thru 2012 US unemployment slowly falling The Fed not ready to raise interest rates Wages remain flat Consumer spending continues to improve US agricultural trade continues to improve Fuel & Food prices high 25

26. Afterthoughts … 26 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 wors t

27. Thanks for your attention! 27 Larry Sanders larry.sanders@okstate.edu 405-744-9834 C 20112011

28. Appendix 28 A tax is a tax, but … High food prices … High fuel prices … Who owns our public debt … The long term debt … Global population growth …

29. A tax is a tax, but … 29

30. 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_rip off.html 30

31. 31

32. High food prices … 32

33. 33 http://www.businessinsider.com/chart-of- the-day-un-food-price-index-2010-12

34. 34

35. 35 http://agcompetitiveness.blogspot.com/20 11/03/corn-energy-food-and-some-though ts-on.html

36. Who owns our public debt … 36

37. 37 http://www.businessinsider.com/chart-of-the-day-federal-debt-held-by-the-public-2010-8

38. Who own US debt (2008)? Foreign owners of US Treasury Securities (July 2008) Nationbillions of dollarspercentage Japan593.422.17% Mainland China518.719.38% United Kingdom290.810.87% Oil exporters173.96.50% Grand Total 2.6764 tril. Total debt: $10 tril. (foreign 26%) (other public 22%) (Fed, intragovt 52%) 38

39. 39

40. High fuel prices … 40

41. 41 http://www.eia.doe.gov/dnav/pet/hist/Le afHandler.ashx?n=PET&s=RCLC1&f=D

42. 42 http://www.eia.doe.gov/dnav/ng/hist/rng c1d.htm

43. 43 http://www.eia.gov/forecasts/aeo/early_p rices.cfm

44. The long term debt … 44

45. http://www.businessinsider.com/chart-of-the-day-bush-policies-deficits-2010-6?utm_source=Triggermail&utm_medium=email &utm_campaign=CS_COTD_063010 45

46. 46 http://www.businessinsider.com/chart-of-the-day-debt-commision-deficit-projections-2010-12?utm_source=Triggermail&ut m_medium=email&utm_term=Clusterstock+Chart+Of+The+Day&utm_campaign=Clusterstock_COTD_120910

47. Global population growth … 47

48. 48 http://www.imf.org/external/pubs/ft/fand d/2006/09/picture.htm

49. 49

50. 50

51. 51

52. 52