State of the Economy: Part I

I just returned from a two-week road tour at schools and conferences where I was involved with some of the leading economists in America.

At the Graduate School of Banking at Louisiana State University, 636 bankers were privileged to listen to Ed Seifried, economist at Lafayette College, Easton, PA, and others concerning their views of the economy.

Seifried indicates that the general economy is slowing dramatically; this is demonstrated by the composite leading index and the purchasing managers index. First, the composite leading index has been negative for four months and is down from 115.8 to 114.5, which is more than one point. This would normally point to a recession by next fall or early winter. However, the diffusion index – i.e. the ten factors making up the composite leading index – is still above 50 which makes a recession tough to call. This summer watch both indices as a forbearer of the economic climate.

The purchasing managers’ index has declined by more than 10 points in recent months from the high to the low 50s. The good news is that it is above 50, which is a sign of a growing economy, but not at as robust a rate as in the past 12 months. If this index drops toward the low 50s, it is another sign of pending economic recession.

Stay tuned to my next few columns for more views on the economy.

Perspective One of the speakers at the faculty meeting indicated that they watched Michael Jordan lose one million dollars while gambling in Las Vegas and think nothing of it! Wow! Sounds like farming when we don’t have a marketing plan!

My e-mail address is:sullylab@vt.edu

Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.

To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.

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