The mood here at the Top Producer Summit is hard for me to put my finger on. Heck, I’m not even sure how to categorize my own outlook. Words like concerned, anxious, wary, and worried pop up often, but my experience is these feelings are far more normal than those few heady moments like 2013 or 2014.
One of the underlying reasons for our ambivalent, if slightly pessimistic emotions are the constant surprises. Not just from government, but from economic data. For example, many of us have been startled by the remarkable resilience of the global economy. While the US is enjoying an historic economic expansion, it seems to be as unexciting as it is durable. Growth chugs along between 2-3 percent, unemployment has been below what we thought were full-employment levels for over a year, and inflation and interest rates barely make headlines. Maybe this is the key to the endurance, a turtle approach – slow and steady.
A long period without good news seems to encourage a “its-too-quiet-out-there” nervousness, so economic data are being scrutinized more carefully than ever. Not to harsh your mood, but I think we’ve found some indicators that would bear monitoring. First, keep an eye on Chinese manufacturing. While the trade war is clearly hurting them, their exports to the US are actually running ahead of previous years, maybe to beat tariff increases. Meanwhile other economists think the decrease in Chinese government stimulus is a bigger factor.
Regardless, it is clear China is slowing down. This is a big deal for the world, as I showed previously because China accounts for almost 40% of global growth. Signals like aluminum demand are flashing alarms. It is at this point that the winner-loser scenario falls apart.
If China does falter, certainly the trade war won’t help, even if it was not the total cause. And as we learned after 2008, reignited the global engine of growth to consume our excess ag production doesn’t happen overnight. Maybe that’s why feelings are so mixed here. Even if we do win the trade war, whatever that looks like, our fate is now so globally connected it could be a long time before we have anything to celebrate.
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