Inflation
From the election to world trade, as well as geopolitical factors that have the potential to shape agriculture in 2024, the December Ag Economists’ Monthly Monitor shows the possibility of several economic surprises.
Analysts say an initial cut could be made as early as first quarter 2024. One of the key factors the central banking system will consider is whether its inflation rate target of 2% has been achieved.
Farmers are opting to tap into their savings from recent prosperous years instead of taking out loans at the highest interest rates since 2007, according to surveys conducted by regional Federal Reserve banks.
While ag economists continue to be at odds when it comes to the likelihood of a recession in the U.S., some doubt the country’s biggest importers will be able to avoid a recession over the next 18 months.
John Phipps says nobody is forcing Americans to pay for the corporate windfall, but as consumers continue to spend, manufacturers to retailers have no reason to lower prices and profits.
Mortgage interest rates just hit a twenty-year high, topping 7%. High borrowing costs will slowly dampen farmer demand for acres as record land prices mean all but a few will have to borrow some to buy.
For 2024, USDA projects that food price inflation will be lower than that seen in 2023 and significantly lower than the rise seen in 2022.
See how rising costs impact you and your family.
Meanwhile, service prices and the core index (which excludes food and energy) remain high, with the core CPI descending to 4.8%.
The CPI for May shows egg prices experienced the largest monthly drop in 72 years, but the price consumers are paying for a dozen eggs is still well above average over the past 10 years.