As COVID cases and its complications continue, the U.S. economy continues to thrive, according to a new quarterly report from CoBank's Knowledge Exchange. Workers are steadily returning to the labor force and consumers are still spending confidently.
Dan Kowalski, vice president of CoBank's Knowledge Exchange division, reports that, until the omicron surge subsides, the biggest economic risk will be the millions of workers who report sick and hamper already beleaguered supply chains. The impacts for food and agriculture sectors will vary significantly by product, but will generally be less severe than earlier in the pandemic.
"Economic risks from new, high-impact coronavirus variants will remain throughout 2022," Kowalski says. "But Americans are increasingly making peace with the notion that the virus, in some form, will be with us for months, if not years, and we must find a way to live more normally with it. This shifting mindset will de-risk the economy to some degree."
As of late December, the U.S. has regained 84% of the jobs lost since the pandemic began, equating to a deficit of 3.6 million fewer workers, roughly the number of jobs employers have open. The supply chain outlook has improved due to more workers in warehousing and transportation. Since May 2020, the U.S. has added 800,000 jobs in the two sectors, eclipsing pre-COVID numbers by 3%.
As the labor market inches closer to full employment, any last arguments for the Federal Reserve to maintain its highly accommodative monetary policy are losing their merit. With the market now anticipating a sea change in monetary policy, the tightening of financial conditions has begun.
Farm supply cooperatives and ag retailers enjoyed a profitable fall season amid high crop prices, strong farmer cash flows and favorable harvest conditions, the Quarterly report notes. Fertilizer prices increased about 20% in Q4 and 160% over the year prior. Input cost inflation, crop protection product shortages and labor challenges could threaten farm supply margins through this spring planting season and potentially beyond.Each CoBank Quarterly provides updates and an outlook for the macro economy and U.S. Agricultural Markets; Grains, Biofuels and Farm Supply; Animal Protein; Dairy; Cotton and Rice; Specialty Crops; and Rural Infrastructure Industries. Read the CoBank Quarterlyhere.