The U.S. economy continues to defy gravity and remains strong despite lingering inflationary pressures, higher borrowing costs and a barrage of other headwinds.
However, looming risks to the economy are increasing in number and size. CoBank’s Knowledge Exchange says the full impact of monetary policy actions–raising interest rates, quantitative easing and contracting the money supply–have yet to be felt. Those policy actions, combined with depleted consumer savings, tighter commercial bank lending standards and the persistently inverted yield curve are likely to result in a mild recession by the fourth quarter of 2023. Ag retailers faced a more challenging environment in the second quarter as fertilizer prices continued to fall.
Despite an overall slowdown in inflation, ag retailers continued to face rising costs, especially for property insurance. While food manufacturers generally indicate they are back to business as usual in the post-pandemic era, many consumers continue to harbor a crisis-management mentality regarding food costs.