Government data this week revealed “Old Man Winter” is having a chilling effect on the U.S. economy.
According to the Commerce Department, Retail Sales fell four-tenths of one-percent last month, in the wake of a smaller decline in December.
With yet another snowstorm blanketing a third of the nation this week, it’s likely that February will mark the third consecutive month of weak job growth.
Harsh weather conditions also were blamed for a steep decline in factory output in January, breaking a string of 5 straight months of increased production
And the nasty weather means that waiters, limousine drivers and store employees are likely to lose wages.
Service sector employees, of course, aren’t the only ones facing the prospect of a thinner pocketbook. A case in point could be found in rural America this week, after the Agriculture Department predicted farm income will decline sharply this year.
Net farm income is forecast to fall nearly 27 percent this year to $95.8 billion. That would still be above the 10-year average. The 2013 income level was $130.5 billion, the highest since 1973 when adjusted for inflation. If realized, this would be the smallest income level since 2010.
The decline is attributed, primarily, to sharply lower crop cash receipts for both corn and soybeans. At 13.9 billion bushels, the 2013 corn crop was the largest in history, which contributed to lower prices. USDA is calling for $11 billion less in corn receipts this year and $6 billion less in soybean sales.
Another factor in the government estimates is the elimination of direct payments under the recently enacted farm bill of 2014. Also at issue is the uncertainty regarding enrollment and payments in other programs this year which could reduce government disbursements by 45 percent.
Traditionally, input costs have paralleled growth in market price for grain. However, this year total production expenses are forecast to decline $3.9 billion in 2014. If realized that would be only the second time in a decade that has occurred.
The growth rate in farm assets, debt and equity also is projected to slow in 2014, compared to recent years. Lower net income, higher borrowing costs and moderation in the growth of farmland values are all contributing factors to the prognosis.
The value of farm assets and farm sector debt both are expected to rise just over 2 percent in 2014. That’s counter to the last few years. However, USDA says the historically low levels of debt to asset levels and equity affirm the agricultural sector’s strong financial position.
Another bright spot in the disappointing outlook could be found in the livestock sector where receipts are expected to rise 0.7%, largely due to a 7% increase in dairy earnings.