Ag Policy Wrap-up - Dr. Larry Sanders, Oklahoma State University

Ag Policy Update–27 Nov 02

(Sunup Program to be aired 28 Nov 02)

1. Congress adjourned last week, and other issues are capturing headlines. Let’s start with the economy.

–Several reports out this week, and the news continues to be mixed.

–Consumer confidence ended a 5 month decline, but it wasn’t enough to satisfy investors.

–Consumer spending is up and that could spark a rebound.

–The US economy is growing faster than earlier estimated.

–Latest figures suggest a brisk 4% growth rate.

–The Fed is releasing its monthly report this week, and it could show some improvements. However, just prior to that:

–Leading Economic Indicators were down.

–Jobless numbers were up, but new claims dropped last week.

–The Federal budget deficit is worsening.

–Manufacturing has been contracting.

–Firms are projecting more hiring early next year.

–Housing construction is down.

–Home sales were slightly higher than expected, but down.

–Talk of war and fears of layoffs continue to weaken consumer confidence.

–Farm families who have had to deal with layoffs or fear them in the near term may be wondering why, given some of the improvements.

–There are no easy answers:

–it generally takes 6-12 months for business and sectors to begin getting back to normal or investing in expansion.

–For many sectors, their priority is to investors, and that sometimes puts the workers in a weakened position.

2. So, is the recovery for real?

–Analysts are at odds on this.

–The OSU and OU business economists seem to think things are improving in OK, and they’re predicting 2003 will be better.

–The National Association of Business Economists, however, think another slowdown is underway.

–The National Retail Federation is predicting higher growth rates.

–Some major retailers, however, are so concerned about the near term they are unwilling to even project for the Christmas shopping season.

–Consumers and farmers will want to be sure that, if they take advantage of cheap loans, they have a safety net for uncertain times over the next 3-12 months.

3. Projections are also at the heart of a Congressional issue that could affect spending, including for agricultural programs. Share the details.

–It has been a long-standing protocol with spending bills in Congress that spending be forecast for the next 10 years.

–It was seen that this helped with planning and attempts to balance the federal budget.

–This past year, however, the House Republican leadership moved to a 5-year projection.

–Insiders say that the new Republican leadership for the Senate will do the same next year.

–Remember that Don Nickles, R-OK, will head the Senate Budget Committee.

–Of course, Democrats say the reason is to hide the growing deficits in later years.

–This cut either way for agricultural spending.

–Farm groups are hoping it will take the pressure off of concerns that programs spending is worsening the deficit.

–However, it could also give the Administration the excuse to wait a few years until the outlook is better.

–Stay tuned. We’ll see.

4. Other policy-related news/activities:

a. We’ll provide an update on WTO, the progres on US-Singapore FTA, and pending trade talks with Australia in the coming weeks.

b. Election turnout rates and margins are coming out. Details will be discussed in the coming weeks.

5. Congress:

a. Recent activity:

–Congress adjourned last week after passing the Homeland Security bill.

b. Current/upcoming:

–Retreats for newly-elected reps & planning for new leadership and agenda.

c. 2002/03 schedule:

–Recess for orientation for newly-elected reps, and organizing leadership for start of 108^th Congress in January.

d. Key issues not completed

–11 of the 13 FY03 spending bills

–Healthcare reform

–Prescription drug benefits

–Merger activities, especially in agriculture

–Emergency assistance for agriculture

–Response to economic slump

–Comprehensive energy legislation (& status of renewable fuel standards)