What happens on Wall Street doesn’t always translate to Main Street.
Peter Tubbs gets the outlook of two Midwestern economists for the next 365 days.
America’s agricultural economy has both opportunity and potential risks in the year ahead according to two Midwest economists.
Ernie Goss of Creighton University and David Swenson of Iowa State University both view the trade policies of the incoming Trump administration as an important issue for rural states.
Ernie Goss, Creighton University: Huge, huge. The U.S. depends heavily on agriculture, agricultural exports and agriculture depends heavily on trade. When your bite gets as bad as our bark that's a problem. And the bark, for an economist, has not been good.
David Swenson, Iowa State University: If we start having trade wars or trade restrictions we either increase the cost of buying stuff from Iowa or decrease our access to goods and services from other places. Ernie said this before, the whole idea of trade is that both sides are satisfied, not zero sum game, that both sides think they're getting a good deal out of this. That is the nature of trade, not one side wins and another side loses. Right now the language and the rhetoric is who are going to be the winners versus who are going to be the satisfied negotiators.
Both economists believe the Renewable Fuel Standard, or RFS, will continue to help agriculture.
David Swenson, Iowa State University: The two industries, the petroleum industry and the ethanol industry, even though they fight tooth and nail they've actually reached an accommodation right now. The petroleum industry is okay with 10% ethanol blend, they're okay with that right now. They have adapted to that and there's no reason to expect that 10% blend, that level of output that we produce with corn starch ethanol to go down. It should be able to at least grow up to the 15 billion gallons mandate and at least stay there.
Valuable manufacturing employment could grow in rural areas, but is fighting both economic and demographic tides.
David Swenson, Iowa State University: Modern agriculture, modern manufacturing has been shedding labor. We've known this all of our lifetimes. They need less labor to produce more goods and services. Two-thirds of our counties are losing population. They're not losing population because the manufacturers or the farmers in that area were doing something wrong, people are moving towards trade centers or to metropolitan areas to work and it is slowly, very slowly but inevitably leaving, that labor is leaving those rural areas. Thinking you're going to turn around though this rural out migration because of federal or state spending or some magic market consequence isn't going to happen.
Ernie Goss, Creighton University: we're talking about labor shortages and serious labor shortages, particularly for skill levels. So Iowa and other states who could really move ahead, if you could get those young men, to become trained to do welding jobs, electricians, instead they're not doing that. They're not going to the community college to retrain themselves or to educate themselves for these jobs. Businesses really need workers, skilled workers and it's a crying shame.
Goss and Swensen both believe that wind energy will continue to grow in the Midwest in the near term.
For Market to Market, I’m Peter Tubbs