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If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
Location
If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
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August 14, 2024
The advanced Q2 2024 Gross Domestic Product estimate came in at 2.8%, a notable increase over expectations. Increases in consumer spending, inventory investment and business investments offset declines in the trade balance. Growth is primarily occurring in the service sector.
The gap between imports and exports (trade deficit) is widening and reaching pandemic-level highs. Rising trade deficits expose the U.S. economy to greater risk from trade restrictions and a weakening dollar, which can ultimately increase prices and/or lower supply of goods. Accordingly, trade and fiscal policy may become increasingly important issues leading up to and following the 2024 presidential election.
Two key indicators (ISM Manufacturing Survey and S&P Global U.S. Manufacturing PMI) registered contraction for the manufacturing sector in July. New orders declined, suggesting lower demand, uncertainty heading into the 2024 election cycle and reduced future production activity. Capital investments remain subdued due in large part to elevated interest rates. Production levels in excess of new orders may contribute to inventory gains in the coming months.
The Fed held the prime rate between 5.25% and 5.50% at their July meeting, but suggested a rate cut is possible following their September meeting. Markets currently expect three rate cuts to finish out 2024 given softer inflation and a weakening labor market (see chart below). The prime rate could be 4.25% - 4. 5% by mid-December.
Job openings, new hires and unemployment levels
Job opening and new hires are falling rapidly. The unemployment rate increased to 4.3% in July.
Source: Bureau of Labor Statistics
Data and trends include select economic indicators to help you gauge the direction of your business. These metrics reflect current market dynamics and their potential impact on operations.
WTI crude oil and diesel prices
Source: U.S. Energy Information Agency.
Observation: Crude oil prices softened in July largely due to rising fears of a global recession.
About this indicator: The West Texas Intermediate (WTI) crude oil price is a benchmark for oil pricing and influences the cost of fuels like diesel, which is essential for running farm equipment and transporting goods.
Transportation
Observation: Container shipping rates have risen due to slower shipping times, longer routes and a spike in goods demand.
About this indicator: The trucking index measures the changes in trucking freight rates over time. The Baltic Dry Index measures the cost of shipping raw materials (such as grains, sugar, metals, coal and other bulk products) in varied sizes of dry bulk shipping carriers. For farmers, a high index suggests strong demand and potentially higher shipping costs, while a low index could indicate weaker demand and lower shipping costs. The container index measures the average cost of shipping containers and reflects the demand and supply dynamics of container shipping services. For producers, changes in the container index can impact the cost of exporting their products or importing supplies.
Fertilizer Affordability Index
Observation: Fertilizers have become more affordable since 2022 due to lower nitrogen, potassium and phosphate prices and higher food prices.
About this indicator: The Fertilizer Affordability Index measures the ability of agriculture producers to purchase fertilizers and is calculated by dividing average fertilizer prices by average food prices. This index provides insight into the relative cost of applying fertilizer in agriculture.
Steel mill products and ag equipment and machinery price indicators
Observation: Steel prices have fallen significantly from pandemic levels due to lower construction and manufacturing activity and strong Chinese exports. Lower steel mill product prices could put downward pressure on ag equipment and machinery costs, which have largely flattened in 2024.
About this indicator: Steel is the primary input for ag machinery and equipment, including shipping vessels. As such, it’s helpful to track changes in steel prices as they may ultimately impact how much agriculture producers pay to replace and/or replace equipment.
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Economic growth will likely continue at a modest pace despite financial headwinds.
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