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U.S. on Verge of Becoming Net Importer

posted on September 26, 2003


Hello, I'm Mark Pearson.

For those of you pondering a career in economic forecasting, government numbers released this week would suggest there might be more sane occupations.

Consider: The gross domestic product grew at a better-than-expected rate of 3.3 percent in the second quarter. But the prolonged slump in the job market has slowed wage growth dramatically.

Consider: New home sales in August rose a healthy 3.4 percent to an annual rate that's the second-highest on record. But America's factories saw orders for costly manufactured goods plummet.

The contradictory reports are enough to demonstrate why there's no consensus on the future of the U.S. economy.

Meanwhile, in farm country, there are new signs of the lingering effects of the nation's hard times.

 

U.S. on Verge of Becoming Net Importer

According to two Purdue University economists, the United States is on the verge of becoming a net agriculture importer, after more than 40 years of net exporting.

Economists Phil Paarlberg and Phil Abbott say that if current trends continue, agriculture exports will be overtaken by imports by the year 2007. The forecast is based on the economists prediction that U.S. agriculture exports will grow to nearly $56.5 billion in the coming fiscal year, an increase of $500 million. Meanwhile, imports are projected to total nearly $47.5 billion, a growth of about $3.5 billion.

Paarlberg and Abbott blame the dramatic shift from exporter to importer status on consumers increased appetite for imported foods, as well as a sluggish export market.

The already slow market was not improved by the Mexican Senates January 2002 passage of a 20% tax on soft drinks made with high-fructose corn syrup. According to Iowa Senator Charles Grassley, the tax is illegal and is costing U.S. manufacturers and farmers numbers of jobs, as well as millions of dollars in exports.

Grassley has threatened congressional action to punish Mexico, claiming it has failed to live up to fair trade practices. In addition, the senator has indicated he may attempt to get Congress to impose tariffs on Mexican farm products as a retaliatory measure.

 


Tags: agriculture news trade