Ahead of the Fed — Farm Level Interest Rates

By Brent Gloy

At the end of 2015 many expected that the Federal Reserve might raise interest rates several times in 2016.  This was not an unreasonable guess as the December 2015 economic projections of the members of the FOMC suggested that most thought increases in the targeted Federal Funds were likely.

As it turned out, there were no additional increases in the target through November, setting up the December meeting as the last likely opportunity for a 2016 increase.  While we discussed the potential for farm level impacts of an increase back in 2015, we thought now would be a good time to take another look at farm level interest rates and begin to think through some of the implications of a potential interest rate increase. Continue reading

Farm Financial Conditions: Is it the 80’s All Over Again?

Ag Economic Insights

By David Widmar and Brent Gloy

One of the most common questions we have been hearing on our speaking trips goes something like this:  “So is this just a replay of the 1970’s farm boom and subsequent bust in the 1980’s?”   While nobody can say for sure, we feel fairly confident in saying that while today’s farm financial conditions clearly have some similarities to the 1980’s it is also quite different in many respects.  That does not mean that this downturn won’t end poorly, just that several of the drivers and factors that led to the previous boom and bust are quite different than those at play today. Continue reading

Inflation: One Big Difference Between Today and the 70’s and 80’s

Inflation

by Brent Gloy

As the farm sector lurches through a painful economic slowdown, many are leery of another farm financial crisis. While a full discussion of the differences and similarities of these periods would require a significant amount of discussion and analysis, we thought that it would be useful to examine one key area in which the current situation differs significantly from the 1970’s farm boom and 1980’s bust. Continue reading