An economist who monitors Iowa’s farm sector says things would be far worse if the Trump Administration hadn’t given farmers $28 billion in trade relief payments. Iowa State University economist Chad Hart says the farm economy has been struggling for the past five years due to depressed commodity prices.
“It wasn’t just the trade war that brought this on,” Hart says. “The trade war sort of exacerbated the problems that we’re seeing out there.”
Hart says one of the lessons Iowa farmers learned from the “farm crisis” of the 1980’s was not to get too deep in debt.
“The ag community was tightening its belt over the past four or five years, but we are seeing debt levels rise. We are seeing bankruptcies rise,” Hart says. “That general malaise in the ag economy over the last five years has taken its toll and there’s not as much cushion for farmers as there was in the past.”
Hart says most economists see signs the U.S. economy will dip into recession sometime in 2020.
“We started to see the ag economy really take its lumps in 2014, 2015, 2016 and we’ve been basically staying down since then,” Hart says. “The general economy is starting to reflect what the ag economy has been going through over the past five years, so it is eerily similar to what we saw in the ’20s and ’30s in that sense.”
During the “roaring ’20s” the U.S. economy grew as a 1922 law imposed tariffs on imported goods and Americans increasingly bought U.S.- made products. Consumer spending currently accounts for about two-thirds of the U.S. economy and Hart says it’ll be up to the U.S. consumer if or when a recession may occur.
Hart made his comments during a recent appearance on Iowa Public Television’s “Iowa Press” program.