A very bullish report and outlook has been released from the Federal Reserve Bank of Kansas City by Jason Henderson, Vice President and Omaha Branch Executive, and Maria Akers, Associate Economist. Below, I have chosen some key excerpts and graphs from the report.
On low farm debt ratios declining, showing strong fiscal positions....
In November, USDA projected farm assets to rise 3 percent above year-ago levels with a 2 percent decline in both farm real estate and non-real estate debt. As a result, farm equity is projected to rise 4 percent compared to last year, lowering farm debt ratios. After holding steady in 2009, the U.S. farm debt-to-asset ratio is projected to fall from 12 percent to 11 percent in 2010 with a similar decline in the debt-to-equity ratio.
On 2010 farm export strength....
United States agricultural exports rose 16 percent in 2010, driven by a 36 percent gain in exports to China. Red meat and poultry exports rebounded 16 percent during the first three quarters of the year, while dairy exports soared 72 percent. Crop exports rose 15 percent due to strong cotton, corn, wheat and soybean exports.
A few of the contingencies mentioned....
- Rural prosperity will depend on the ability of rural firms to compete in emerging global markets.
- With both farm and nonfarm economies gaining steam, rural economic activity in the year ahead will again hinge on the global recovery. According to the Federal Reserve System’s most recent Summary of Economic Projections, the U.S. economic recovery is projected to strengthen in 2011 with gross domestic product rising between 3.0 and 3.6 percent and the unemployment rate falling to 8.9 to 9.1 percent.6 The global recovery is expected to strengthen as well with the International Monetary Fund projecting world GDP growth of 4.2 percent in 2011.
- (T)he challenges posed by rural housing markets and budget constraints at the state and local levels could wane. As in 2010, rural prosperity will hinge on whether rural firms can meet the rising demand of global consumers.
Charts included in the report....
1. This chart shows the importance of "it's all about China" for export demand trends:
2. A look at this past decade's net farm income:
3. This next graph shows the recent upsurge in employment in the nonmetro areas as a result of the strong farm sector economy:
4. One of the report's few stated concerns was that of continued weak housing in the rural areas: