Could the end of the economic crisis be nearer than it seems?
March 03, 2009
by Josh Sosland
While a downward revision had been anticipated for the fourth-quarter gross domestic product, the precipitous adjustment to a 6.2% decline announced Feb. 27 was jarring. The Commerce Department initially had estimated a 3.8% drop in G.D.P. after a 0.5% decline in the third quarter. The 6.2% drop marked the worst single quarter since a 6.4% drop in January-March 1982.
Beyond finding relief in the respite from analogies to the Great Depression, grain-based foods may find the comparison with 1982 interesting. Like the present time, the industry a generation ago was coming off a troubled period marked by extraordinary price strength for commodities and energy. The record high grain prices at the time were driven by strong and growing world demand, an environment many believed would be sustained into the future. Instead, the years that followed were marked by sagging demand for U.S. grain and relatively benign ingredient markets (with notable drought-driven exceptions).
It should also be remembered that the stock market bottomed late in the summer of 1982, presaging one of the most robust periods of economic prosperity (and stock market strength) in U.S. history. Admittedly, the business community had greater confidence in the individual seated in the Oval Office in 1982 than its present occupant enjoys. Additionally, the current financial and housing crises don’t have an easy antecedent in 1982.
Still, the earlier experience offers grain-based foods hope that the end of the economic crisis could be nearer than it seems.