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Are we holding back our economic recovery?

Published on 21 September 2009

Perhaps it is because it’s fall and students are returning back to school, but I’ve recently had flashbacks to my university economics class while reading e-mail responses from industry contacts.

This month I’ll be attending AABP in Omaha, Nebraska, and World Dairy Expo in Madison, Wisconsin.

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In my communication with producers, veterinarians and nutritionists requesting to meet up during my travels, some declined with responses like “There is a ban on out-of-state travel.” “Unfortunately due to current economic conditions I will not be attending this year.” “I will not be attending this year – one of the few I have missed since 1986.”

My university instructor told us that what is so difficult about jump-starting a recessed economy is that everyone is waiting for someone else to spend a dollar first. In a recessed economy, there’s lots of risk in spending that dollar.

The person you spend it with may not turn around and spend it again. Or on the flip side, the dealer making a sale may wonder if your account receivable will ever be paid.

The consumer confidence index is a measure of this trust. It is a bell-weather market signal and a self-fulfilling prophecy.

When it trends down, people get worried and start spending less. When it trends up, people feel comfortable and continue spending more.

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But what about the in-between times? What happens when the index plateaus? Could it be that the economy is ready to move higher but we’re all just waiting for someone else to make the first move?

Since May the consumer confidence index has been at a relative plateau, slipping a bit then climbing again. The Conference Board’s August’s consumer confidence numbers were released with the following commentary:

“Consumers’ short-term outlook was much improved from last month. Those expecting an improvement in business conditions over the next six months increased to 22.4 percent from 18.4 percent. Those anticipating conditions to worsen decreased to 15.8 percent from 19.0 percent.”

Could we have reached a turning point in our recovery? I think we will all choose for ourselves, and the rate at which we decide we’ve turned a corner will be a self-fulfilling prophecy of its own about our recovery.

Even in this issue, some say dairy prices will move higher this fall. I hope they will.

World Dairy Expo signals the opening bell of 2010 for the marketing of many allied industry goods and services.

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There’s still lots to discuss and talk about in the dairy industry, as shown in our 124-page show issue. It’s given me hope that allied industry are ready to continue supporting dairy. I hope it gives you hope too. PD

Walt Cooley
Editor

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