Jason Henderson Vice President and Branch Executive September 27, 211 The views expressed are those of the author and do not necessarily reflect the opinions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.
Unemployment Rates by County (August 21 to July 211 average) Source: Bureau of Labor Statistics
Non-farm Job Growth Percent change from year-ago (three-month moving average) 4. 3. Jul-1 Jan-11 Jul-11 2. 1.. -1. -2. -3. U.S. 1J WY OK NE IA CO MO NM KS Source: Bureau of Labor Statistics
State Personal Income Growth 21:Q2 to 211:Q2 (1) North Dakota 13.3 (2) Texas 7.3 (3) Iowa 7.2 (3) Nebraska 7.2 (5) South Dakota 7. (5) Oklahoma 7. (7) Kansas 6.8 (8) Minnesota 6.7 (9) California 6.4 (1) Wyoming 6.3 U.S. Average 5.4 Farming Mining Durable Good Manufacturing Source: Bureau of Economic Analysis
Non-irrigated Cropland Values (Percent change 21:Q1 to 211:Q1) Source: Agricultural Finance Databook, Federal Reserve Bank of Kansas City
3 2 1-1 -2-3 -4 U.S. Real Net Farm Income and Agricultural Equipment Sales Percent change from year ago 4 Net farm income 4 wheel drive tractor sales 25 26 27 28 29 21 211 Source: USDA and Association of Equipment Manufacturers Note: 211 Agricultural Equipment Sales are YTD through August
Nebraska Manufacturing Employment and Export Growth Percent change from year ago 4 Percent change from year ago 2 Manufactured Exports (Left Scale) 3 Manufacturing Employment (Right Scale) 15 2 1-1 1 5-5 -2-1 27:Q2 28:Q2 29:Q2 21:Q2 211:Q2 Source: Bureau of Labor Statistics and WISERTrade
(Tenth Federal Reserve District) Percent change from previous year 4 3 2 1-1 -2-3 -4-5 Sources: WISER Trade Manufactured Exports 29 21 211YTD Total Transportation Food Chemicals Machinery Computers & Equipment
Nebraska Retail Employment and Sales Growth Percent change from year ago 8 Retail Employment 6 Net Taxable Retail Sales 4 2-2 -4 8 6 4 2-2 -4-6 27:Q4 28:Q2 28:Q4 29:Q2 29:Q4 21:Q2 21:Q4 211:Q2-6 Source: BLS and Nebraska Department of Revenue Note: Second quarter 211 retail sales data is through May
Will the Growth Continue?
Source: USDA U.S. Corn Prices and Inventories Percent of annual consumption Dollars per bushel 9 9 8 7 Corn Inventories (Left Scale) Corn Price (Right Scale) 8 7 6 6 5 5 4 4 3 3 2 2 1 1 197 1975 198 1985 199 1995 2 25 21
World Crude Oil Production and Consumption Million barrels per day 92. Production 92. Million barrels per day 92. Production 92. Consumption 91. Consumption 91. 87. 87. 9. 9. 82. 82. 89. 88. 89. 88. 77. 77. 87. 87. 86. 86. 72. 72. 85. 85. 2 22 24 26 28 21 212 21:Q1 211:Q1 212:Q1 Source: Energy Information Administration EIA Forecasts for 211 and 212 data.
Commodity Prices and the Value of the Dollar Index (Jan 25 = 1) Index (Jan 25 = 1) 2 15 Commodity Prices (Left Scale) 18 Real Dollar Value (Right Scale) 14 16 13 14 12 1 8 6 Jan-9 Jan-93 Jan-96 Jan-99 Jan-2 Jan-5 Jan-8 Jan-11 12 11 1 9 8 Source: Commodity Research Bureau and Federal Reserve Board of Governors
Farm Incomes and Interest Rates Constant 25 dollars (billions) 125. 1. 75. Percent 7.5 Real Net Farm Incomes Less Government Payments (Left Scale) Yield on 1 Year Treasury - adjusted for 5. inflation (Right Scale) 2.5 5.. 25. -2.5. 197 1975 198 1985 199 1995 2 25 21-5. Source: Henderson and Briggeman (211), What are the Risks in Today s Farmland Market? Main Street Economist, Issue 1.
Dollars per barrel 15 Crude Oil and Gasoline Prices Dollars per gallon 5 12 4 9 3 6 2 3 WTI Crude Oil (Left Scale) Gasoline Price (Right Scale) Jan-7 Jan-8 Jan-9 Jan-1 Jan-11 1 Source: Commodity Research Bureau and Energy Information Administration
Annual percent change 3.5 3. 2.5 U.S. Real GDP Growth 212 211 3.5 3. 2.5 2. 2. 1.5 1. Source: Blue Chip Economic Indicators, August 211 Forecast Ranges 211:Q4 212:Q4 Top 1 Avg. 3.3 3.4 Bottom 1 Avg. 1.8 2.3 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Date of Forecast 1.5 1.
Sovereign Debt
Percent of GDP 2 18 16 14 12 1 8 6 4 2 Federal Government Debt as a Percent of GDP Actual Extended Baseline Alternative Scenarios CBO Projection June 211 1945 1955 1965 1975 1985 1995 25 215 225 235 2 18 16 14 12 1 8 6 4 2 Source: Congressional Budget Office
General Government Gross Debt Japan Greece Italy Ireland United States France Portugal Germany India Brazil Spain China Russia Source: International Monetary Fund 5 1 15 2 25 Percent of GDP
Source: Federal Reserve Bank of Cleveland Federal Reserve Balance Sheet: Assets Billion Dollars 3 Fed Agency Debt MBS Purchases 25 Liquidity to Key Credit Markets Lending to Financial Institutions 2 Long Term Treasury Purchases 15 Traditional Security Holdings 1 5 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11
Commodity markets are shaping the Midwest economy. Strong agricultural and energy demand boost exports. Similar to U.S., rising commodity prices slowed growth. The commodity boom could continue in the near term. Strong demand and tight supplies are a recipe for higher prices. A weak dollar is associated with higher commodity prices. Farm incomes rise with low interest rates. By tapping strong global demand for commodities, the Midwest economy could strengthen further.
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