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Current Farm Downturn Not Likely to Reach 1980’s Crisis

A report by a Farm Credit Administration economist told the Administration’s board members last week that the current downturn in the farm economy is not likely to reach a 1980s-style crisis. Farm Credit chief economist Stephen Gabriel said the “likelihood of this is very low,” adding that a confluence of adverse factors led to the crisis that occurred in the 1980s. He says it would take a similar combination of adverse developments to create another crisis in the farm economy. While the two periods are similar in some respects, Gabriel points out that interest rates were very high in the 1980s, and today’s interest rates are historically low. The price of oil is another major difference, according to his report. In 1979 and 1980, the price surged, while today it is declining. Also, the general economy is in better shape today than it was in the 1980s. The country experienced two recessions during the 1980s’ crisis whereas today we’re in an “extended, if lackluster, economic expansion,” according to Gabriel.