BOISE, ID – The critical role American farmers and ranchers serve in protecting the nation’s food supply is undeniable but the outlook for 2021 depends on several influential factors. That’s according to AgAmerica’s Chief Economist Dr. John Penson who explains that federal relief received thus far has slowed the rate of farm bankruptcies and prevented it from reaching the record levels seen in 2010. The existing fiscal response helped mitigate COVID-19’s impact, but more support will likely be needed to fully absorb the blow to American agriculture. Penson outline three areas of optimism. First, the value of the U.S. dollar has dropped to its lowest levels in nearly two years which is good news for agriculture as U.S. commodities are more competitively priced for the export market. Second, Americans used stimulus checks to pay down debt – which fell by $34 billion and recorded its first decline in six years. Finally, interest rates are expected to remain historically low based upon comments from the Chairman of the Federal Reserve, Jerome Powell.
On the downside, first, the decline in the U.S. dollar is bad news for the American consumer because it means higher costs for foreign products and travel. Second, the federal budget deficit reached $3 trillion within a year as of the end of June which is its highest level relative to gross domestic product (GDP) since World War II. Finally, federal debt as a ratio to GDP is approaching 100 percent this year due to COVID-19 relief spending.
(SOURCE: All Ag News)