Fed Bank Economist says Agriculture Strong in Midwest and Great Plains Regions
High commodity prices have helped Midwest and Great Plains maintain strong economy.
Compiled by staff
Published: Nov 3, 2011
Jason Henderson with the Kansas City Federal Reserve Bank at the Omaha branch says the economy in the Midwest and Great Plains continues to show strength, specifically due to high commodity prices.
"Commodity prices and commodity markets are really driving the strength of our economy," Hendersen said. "We're having stronger job gains and stronger income growth in our district and our region throughout the Great Plains and a lot of that is really attributed to commodity markets in agriculture."
Henderson says while there are outside influencers that bring volatility to the markets, fundamentally agriculture remains very strong.
"There is robust demand and expected to be strong demand going forward from international emerging markets such as China," Hendersen said. "At the same time that strong demand is really straining our supplies, so the market fundamentals suggest a strong profitability for agriculture and high commodity prices."
Hendersen says that we are facing challenges from the financial markets, which has led to a lot of uncertainty. The situation in Europe and how the European Union is going to deal with Greece will impact agriculture, commodity prices and the value of the dollar.
However, Hendersen says the Federal Reserve has committed to keeping short-term rates low at least through 2013, which reduces some uncertainty, but he says we are defiantly living and working in a global marketplace.
"In general what we've seen in the last month is that financial market challenges emerging from Europe can have major swings on commodity prices, both up and down," Hendersen said.
Henderson says one of the keys will be a strong economy in China, the number one export market for the U.S.
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