LAKELAND, FL – Volatile seems to be one of the best words to describe 2020, especially in agriculture. Dr. John Penson is Chief Economist with AgAmerica and suggests the abrupt shift in consumer demand caused by the COVID-19 pandemic was an unparalleled event in modern history.
The question turns to where will agriculture and the general economy go in 2021? Penson says when we look at interest rates, they’re expected to remain relatively low throughout the year as inflation pressures remain muted despite the substantial increase in national debt.
After contracting by 3.5 percent in 2020, the nation’s gross domestic product (GDP) is expected to see growth of 6.5 percent and will return real GDP to where it stood before the pandemic began.
Unemployment rates are falling, but remain above 6 percent, nearly twice the rate prior to the pandemic.
The value of the dollar against major currencies will remain relatively weak due to the large current account trade deficit and other economic, financial, social, and political conditions in the U.S. in comparison to our major trading partners. A weaker dollar makes imports more expensive to U.S. buyers,
but enhances the competitiveness of U.S. goods in overseas markets.
Consumer demand will grow and the personal savings rate in the fourth quarter of 2020 was 13.4 percent compared to 7.3 percent a year earlier. This should support greater consumer spending in 2021.
Finally, e-commerce has grown to account for more than 10 percent of total grocery spending and will likely remain a prominent fixture of the food supply chain long after the pandemic has ended.
(SOURCE: All Ag News)