Consumer spending accounts for about two-thirds of all economic activity in the United States. So it's a critical factor in shaping the strength of the economic recovery.
That means there's good news this week from the government, which reports consumer spending in April rose a solid three-tenths of a percent. Personal income, the fuel for consumer spending, also rose in April by the largest amount in 39 months. And overall, the economy grew at a 4.4 percent annual rate during the first quarter of the year. That's slightly better than analysts expected.
That news may be hard to swallow for consumers paying $2-a-gallon for gasoline and $3-a-gallon for milk. Those factors may explain why consumer confidence was stagnant this month.
Confidence also may be lagging in farm country, where the prospect of another bumper harvest was dampened by an unwelcome visit from Mother Nature.
Flooding was especially severe in Iowa, where storms produced a string of 19 tornadoes, hail, high winds and heavy rains. As much as 9 inches fell over the weekend in the central part of the state. Bradgate took the brunt of a tornado that demolished nearly every building and home in the northern Iowa town of 100. Iowa Governor Tom Vilsack is asking for a federal disaster declaration covering 61 counties.
The hardest-hit area in Nebraska was the south-central and southeastern third of the state. An estimated 19 tornadoes ravaged parts of Gage County, but there were other areas with rain, hail and high wind damage as well. Producers in the northern third of Illinois also worry about an adverse impact on crop development with five to ten percent of the ground below standing water.
Many farmers in the Corn Belt worry the harsh weather may have a lingering impact on grain production. Nebraska producers say the damage to irrigation systems is likely to have the greatest long-term impact. An estimated 70 percent of all corn and soybeans grown in the state are produced using supplemental water. In addition, nitrogen, particularly liquid nitrogen, applied within a few hours of a heavy rain may be lost. Studies from the Iowa Soybean Association suggest that heavy rains this past week over Midwest states may have carried away as much as half of the nitrogen farmers applied.
Many farmers in Iowa fear they will have to replant. Even before last weekend's rainfall, many parts of the state had a full soil moisture profile from thunderstorms starting earlier this month. When replanting will be done or what crops will go into the replanted acreage all depends on the timing of drier weather.