Farm economists and Congressional lawmakers fear continued Federal Reserve interest rate hikes will further damage the economy, even if the fires of inflation are extinguished.
The Federal Reserve is committed to continue raising interest rates ‘til inflation is tamed. Chairman Jerome Powell has said as much, and that has farm economists like AFB’s Bernt Nelson concerned. “With the basis point adjustment, we really saw some strengthening happening with the U.S. dollar comparatively to other countries. So, as the dollar increases in value relative to other countries, that makes our products more expensive for these other countries to purchase. And that could result in things such as a slow in exports of some of our products, like meats.”
President Biden and his party downplay the chances for a full-blown recession, while Republicans seeing a political advantage ahead of the midterm elections, play it up. Senate GOP Leader Mitch McConnell; “The Chairman of the Fed’s been quite clear. We’re going to have to raise rates. That runs the risk of having a recession, and that’ll be the price the American people have to pay.” The price American people will have to pay for spending bills Republicans blame for inflation and Democrats say were needed for COVID, climate change, and healthcare.
But despite the political finger pointing, AFB’s Nelson says consumers could still suffer.
“When we start to see these recessions looming, or when we start to see an economic slowdown, we typically see consumers shift toward getting a better deal at the grocery store rather than necessarily purchasing a premium product.”
AFB reported this week that skinless tom turkey breasts cost 112 percent more this September over last, while a dozen grade A large eggs were up by 27 percent.