Economic Growth Quickens
U.S. gross domestic product (GDP) grew 3.2 percent in the first quarter, higher than most economists expected. The growth marks 38 consecutive quarters of growth. Bob Young, President of Agricultural Prospects and former economist with American Farm Bureau, likens the recent GDP report to knowing what your blood pressure was this morning, “it provides no real information as to how your spouse’s actions will affect those numbers tomorrow.” Peeking underneath the surface in the recent report, Young worries “there’s a dark cast to these seemingly bright numbers.”
GDP counts personal consumption expenditures, gross private domestic investments, exports, imports, and government consumption expenditures. The largest of these components is personal consumption expenditures. Consumer spending drives roughly 70 percent of the nation’s economy. Young notes that personal expenditures declined in the first quarter, the third consecutive quarter of declines. Interestingly, spending on goods declined such that it reduced GDP growth in the first quarter, meaning other factors like spending on services picked up the slack. Young also notes trends in investment figures are also worrisome. These developments and the ongoing drama concerning trade and international markets could be signs the economy’s winning streak might change. For Nebraska producers, especially livestock producers, a growing economy is a must to keep demand growth apace with production growth. Let’s hope the signs turn out to be red herrings.