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About


The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


November 7, 2013

The Cream of the Crop

The Atlanta Fed’s Agriculture Advisory Council convened recently for another lively discussion and, as always, we learned a great deal. While last year’s overarching agriculture story was “all about the drought,” this year’s conversations were more about “cool and wet.” Council members told stories of delayed planting or replanting, but participants acknowledged that some of that wet and cool weather contributed to good yields, although there is some frost risk for late planted/harvested crops.

Generally speaking, exports for many southeastern agriculture products are expected to increase. This includes beef, poultry, wood/biomass, grains, cotton, and rice. Members also hope for continued strong demand from China for yellow pine saw timber. We continued to hear reports of significant downside risks for cotton. Should China release its large cotton inventory onto the market, cotton prices and exports would be adversely affected.

Regarding investments, council members reported replacing equipment in the timber industry, as well as farming implements such as irrigation equipment as well as storage augmentation. As one council member said, “We are improving what we have rather than expanding.” Additionally, some farmers are replacing smaller, labor intensive equipment with larger, more modern equipment. While these acquisitions improve production efficiency, they also address difficulties in finding labor. Reports persist of paperwork burdens with the E-verify program and the high cost of housing people participating in the H2A guest-worker program.

Overall, farm product prices are down, and headline consumer price index (CPI) is trending down. The chart below shows CPI trends and the price index for all farm products over time.

Headline CPI and Prices Received by Farmers/All Farm Products

Although overall farm product prices are down, some specific commodity prices are helping regional agriculture producers, especially those in the cotton, rice, beef, hog, and poultry sectors, which are all showing higher year-over-year prices. Soybeans and corn prices are trending down, although lower corn prices are good news for protein producers whose use corn for feed. Florida citrus growers continue to have problems with citrus greening, and although they believe a solution is forthcoming, the problem is not yet resolved. Meanwhile, the cost of production is higher than normal, but lower yields have resulted in higher prices for citrus products. Lumber prices, which are down from the first half of 2013, are still well above recession-era lows (see the chart).

Random Lengths Framing Lumber Composite ($/1000 Bd Ft)

Land rents are being actively negotiated. Landlords, seeing recent good yields, are negotiating future rents based on these higher yields. Timberland prices were reported as being flat or down, but several council members reported higher farmland prices. Increased costs tied to regulatory compliance and the impact of the Affordable Care Act were both mentioned as having ongoing negative impact on general business conditions.

Council members also discussed how agriculture has changed over time, moving away from small and midsized farms that depended on the subsidy system toward farm consolidation. As one participant said, “Two generations ago, you managed your farm with a little spiral notebook and a pencil in your front pocket. The next generation used a legal pad. Now computers and business plans are the norm.” Members noted that young people are getting degrees and are eager to join the ranks of modern farmers. Some have interests in local organic farming, but others see big agriculture changing and want to be a part of the transition.

Another topic of discussion was the growth of agritourism, which includes such realms as local sourcing, sustainable sourcing, and even destination weddings. An EconSouth article titled "Agritourism Takes Root in the Southeast" reported on this growing trend back in 2011, and it’s one that is helping farmers and rural economies tap into the region’s dynamic tourism market.

So as farmers complete fall planting, finish their harvests, and prepare for winter, we here at the Fed continue to watch, listen, and learn. While farm price and production reports remain essential in our analysis of the agriculture sector, our Agriculture Advisory Council meetings give us the breadth and depth of the story that is agriculture in the South.

As for me, I am thankful to understand a little more about how what ends up on my plate gets there. When I visit the season’s pumpkin patches and tree farms, I know I am in for a lot of fun, but I will also be looking behind the curtain to learn more about the fascinating business that is agriculture.

Photo of Teri GaffordBy Teri Gafford, a Regional Economic Information Network Director in the Atlanta Fed’s Birmingham Branch


July 18, 2012

Atlanta Fed's Beige Book points to modest growth, rising caution

The Summary of Commentary on Current Economic Conditions by Federal Reserve District—commonly known as the Beige Book—is a report is published by the Federal Reserve eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.

Below is a summary of the Atlanta Fed's July 18 Beige Book:

Summary

  • Reports from Sixth District business contacts indicated that economic activity expanded at a modest pace in June and early July. The outlook among most firms remained cautiously optimistic, although the majority of contacts acknowledged that risks were weighted to the downside.

Consumer spending and tourism

  • District retail sales activity improved slightly in June and early July, but merchants reported that consumers remained very conservative.
  • Tourism activity and business travel remained strong, and the outlook among contacts was positive for the rest of the year.

Real estate and construction

  • District residential brokers indicated that home sales were flat to slightly higher compared with year-ago levels. Brokers also reported that the decline in inventories has helped stabilize home prices in many areas. The sales outlook among brokers remained positive with most anticipating continued modest year-over-year home sales gains.
  • District homebuilders reported that new home sales and construction rose modestly compared with year-ago levels. Contacts noted that multifamily construction remained robust. The majority indicated that new home inventories declined further on a monthly and an annual basis. In the near term, homebuilders expect sales and construction to post modest gains compared with a year earlier.

Manufacturing and transportation

  • Manufacturing contacts indicated that the pace of new orders and production growth remained positive but had moderated.
  • According to railroad contacts, intermodal activity continued to strengthen. Double-digit increases in shipments of petroleum products, motor vehicles, and equipment were reported; however, movement of grain, metallic ores, and nonmetallic minerals declined.

Banking and finance

  • Banking contacts noted some improvement in residential mortgage lending and auto loans continued to be a source of strength. Commercial and industrial lending remained soft.

Employment

  • Regional employment growth remained positive but muted. Employers continued to cite uncertainty regarding future economic conditions as a reason for limiting hiring, and recent economic volatility appears to have exacerbated these anxieties.
  • Contacts continued to note difficulty in finding qualified applicants for many highly technical positions. The skills mismatch problem has been especially hard on low-wage individuals, according to community and economic development contacts.

Prices and wages

  • Firms responding in June to the Atlanta Fed's Business Inflation Expectations survey reported a decline in unit cost expectations for the second consecutive month. Survey respondents indicated that, on average, they expect labor and material costs to rise 1.7 percent over the next 12 months. That figure is down from 1.8 percent in May and 2.1 percent in April.
  • Business contacts reported that lower prices for natural gas and refined oil products were reportedly providing some cost relief. Wage pressures remained modest, although some employers noted that they were increasing starting pay for workers with high-demand skill sets.

Natural resources and agriculture

  • Contacts continued to report that investment in expanding and maintaining existing transportation infrastructure would be necessary to accommodate increases in domestic oil and natural gas production.
  • Varying levels of drought conditions had expanded through much of the District, resulting in stress to some crops. However, the June tropical storm helped some areas.

The next Beige Book will be published August 29.

Photo of Shalini PatelBy Shalini Patel, a senior economic research analyst in the Atlanta Fed's research department


July 14, 2011

Employment: Bad news nationally is really bad news for the Southeast

Last week and earlier this week macroblog discussed recent reports from the labor market: the June employment report and the May Job Openings and Labor Turnover Survey, commonly known as JOLTS. The analysis points out that recent data from the labor market have been, well, rather disappointing.

I would argue that a disappointing labor market at the national level is amplified here in the Southeast. Why? The downturn in employment during the recession was deeper in this region than in most other areas in the country, and the job recovery has been more anemic here than anywhere else.

Here's a look at what I mean:

Employment Losses During Downturn and Gains During Recovery

Looking at the Atlanta Federal Reserve District, we see that this region shed 10.1 percent of total employment during the downturn (the red bar) and has only gained 2.3 percent during the recovery. I use the terms "downturn" and "recovery" liberally: what the chart represents is each District's employment loss from its peak to when job losses ended (downturn) and gains since employment levels stopped falling (recovery). Only the Chicago Fed and San Francisco Fed regions saw larger downturns, but none have seen a more feeble recovery than we here in the Atlanta region.

So when we see national labor market trends that show weakness in employment gains, it is particularly bad news here in the Southeast.

Photo of Michael ChrisztBy Mike Chriszt, an assistant vice president in the Atlanta Fed's research department

November 7, 2013

The Cream of the Crop

The Atlanta Fed’s Agriculture Advisory Council convened recently for another lively discussion and, as always, we learned a great deal. While last year’s overarching agriculture story was “all about the drought,” this year’s conversations were more about “cool and wet.” Council members told stories of delayed planting or replanting, but participants acknowledged that some of that wet and cool weather contributed to good yields, although there is some frost risk for late planted/harvested crops.

Generally speaking, exports for many southeastern agriculture products are expected to increase. This includes beef, poultry, wood/biomass, grains, cotton, and rice. Members also hope for continued strong demand from China for yellow pine saw timber. We continued to hear reports of significant downside risks for cotton. Should China release its large cotton inventory onto the market, cotton prices and exports would be adversely affected.

Regarding investments, council members reported replacing equipment in the timber industry, as well as farming implements such as irrigation equipment as well as storage augmentation. As one council member said, “We are improving what we have rather than expanding.” Additionally, some farmers are replacing smaller, labor intensive equipment with larger, more modern equipment. While these acquisitions improve production efficiency, they also address difficulties in finding labor. Reports persist of paperwork burdens with the E-verify program and the high cost of housing people participating in the H2A guest-worker program.

Overall, farm product prices are down, and headline consumer price index (CPI) is trending down. The chart below shows CPI trends and the price index for all farm products over time.

Headline CPI and Prices Received by Farmers/All Farm Products

Although overall farm product prices are down, some specific commodity prices are helping regional agriculture producers, especially those in the cotton, rice, beef, hog, and poultry sectors, which are all showing higher year-over-year prices. Soybeans and corn prices are trending down, although lower corn prices are good news for protein producers whose use corn for feed. Florida citrus growers continue to have problems with citrus greening, and although they believe a solution is forthcoming, the problem is not yet resolved. Meanwhile, the cost of production is higher than normal, but lower yields have resulted in higher prices for citrus products. Lumber prices, which are down from the first half of 2013, are still well above recession-era lows (see the chart).

Random Lengths Framing Lumber Composite ($/1000 Bd Ft)

Land rents are being actively negotiated. Landlords, seeing recent good yields, are negotiating future rents based on these higher yields. Timberland prices were reported as being flat or down, but several council members reported higher farmland prices. Increased costs tied to regulatory compliance and the impact of the Affordable Care Act were both mentioned as having ongoing negative impact on general business conditions.

Council members also discussed how agriculture has changed over time, moving away from small and midsized farms that depended on the subsidy system toward farm consolidation. As one participant said, “Two generations ago, you managed your farm with a little spiral notebook and a pencil in your front pocket. The next generation used a legal pad. Now computers and business plans are the norm.” Members noted that young people are getting degrees and are eager to join the ranks of modern farmers. Some have interests in local organic farming, but others see big agriculture changing and want to be a part of the transition.

Another topic of discussion was the growth of agritourism, which includes such realms as local sourcing, sustainable sourcing, and even destination weddings. An EconSouth article titled "Agritourism Takes Root in the Southeast" reported on this growing trend back in 2011, and it’s one that is helping farmers and rural economies tap into the region’s dynamic tourism market.

So as farmers complete fall planting, finish their harvests, and prepare for winter, we here at the Fed continue to watch, listen, and learn. While farm price and production reports remain essential in our analysis of the agriculture sector, our Agriculture Advisory Council meetings give us the breadth and depth of the story that is agriculture in the South.

As for me, I am thankful to understand a little more about how what ends up on my plate gets there. When I visit the season’s pumpkin patches and tree farms, I know I am in for a lot of fun, but I will also be looking behind the curtain to learn more about the fascinating business that is agriculture.

Photo of Teri GaffordBy Teri Gafford, a Regional Economic Information Network Director in the Atlanta Fed’s Birmingham Branch


July 18, 2012

Atlanta Fed's Beige Book points to modest growth, rising caution

The Summary of Commentary on Current Economic Conditions by Federal Reserve District—commonly known as the Beige Book—is a report is published by the Federal Reserve eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.

Below is a summary of the Atlanta Fed's July 18 Beige Book:

Summary

  • Reports from Sixth District business contacts indicated that economic activity expanded at a modest pace in June and early July. The outlook among most firms remained cautiously optimistic, although the majority of contacts acknowledged that risks were weighted to the downside.

Consumer spending and tourism

  • District retail sales activity improved slightly in June and early July, but merchants reported that consumers remained very conservative.
  • Tourism activity and business travel remained strong, and the outlook among contacts was positive for the rest of the year.

Real estate and construction

  • District residential brokers indicated that home sales were flat to slightly higher compared with year-ago levels. Brokers also reported that the decline in inventories has helped stabilize home prices in many areas. The sales outlook among brokers remained positive with most anticipating continued modest year-over-year home sales gains.
  • District homebuilders reported that new home sales and construction rose modestly compared with year-ago levels. Contacts noted that multifamily construction remained robust. The majority indicated that new home inventories declined further on a monthly and an annual basis. In the near term, homebuilders expect sales and construction to post modest gains compared with a year earlier.

Manufacturing and transportation

  • Manufacturing contacts indicated that the pace of new orders and production growth remained positive but had moderated.
  • According to railroad contacts, intermodal activity continued to strengthen. Double-digit increases in shipments of petroleum products, motor vehicles, and equipment were reported; however, movement of grain, metallic ores, and nonmetallic minerals declined.

Banking and finance

  • Banking contacts noted some improvement in residential mortgage lending and auto loans continued to be a source of strength. Commercial and industrial lending remained soft.

Employment

  • Regional employment growth remained positive but muted. Employers continued to cite uncertainty regarding future economic conditions as a reason for limiting hiring, and recent economic volatility appears to have exacerbated these anxieties.
  • Contacts continued to note difficulty in finding qualified applicants for many highly technical positions. The skills mismatch problem has been especially hard on low-wage individuals, according to community and economic development contacts.

Prices and wages

  • Firms responding in June to the Atlanta Fed's Business Inflation Expectations survey reported a decline in unit cost expectations for the second consecutive month. Survey respondents indicated that, on average, they expect labor and material costs to rise 1.7 percent over the next 12 months. That figure is down from 1.8 percent in May and 2.1 percent in April.
  • Business contacts reported that lower prices for natural gas and refined oil products were reportedly providing some cost relief. Wage pressures remained modest, although some employers noted that they were increasing starting pay for workers with high-demand skill sets.

Natural resources and agriculture

  • Contacts continued to report that investment in expanding and maintaining existing transportation infrastructure would be necessary to accommodate increases in domestic oil and natural gas production.
  • Varying levels of drought conditions had expanded through much of the District, resulting in stress to some crops. However, the June tropical storm helped some areas.

The next Beige Book will be published August 29.

Photo of Shalini PatelBy Shalini Patel, a senior economic research analyst in the Atlanta Fed's research department


July 14, 2011

Employment: Bad news nationally is really bad news for the Southeast

Last week and earlier this week macroblog discussed recent reports from the labor market: the June employment report and the May Job Openings and Labor Turnover Survey, commonly known as JOLTS. The analysis points out that recent data from the labor market have been, well, rather disappointing.

I would argue that a disappointing labor market at the national level is amplified here in the Southeast. Why? The downturn in employment during the recession was deeper in this region than in most other areas in the country, and the job recovery has been more anemic here than anywhere else.

Here's a look at what I mean:

Employment Losses During Downturn and Gains During Recovery

Looking at the Atlanta Federal Reserve District, we see that this region shed 10.1 percent of total employment during the downturn (the red bar) and has only gained 2.3 percent during the recovery. I use the terms "downturn" and "recovery" liberally: what the chart represents is each District's employment loss from its peak to when job losses ended (downturn) and gains since employment levels stopped falling (recovery). Only the Chicago Fed and San Francisco Fed regions saw larger downturns, but none have seen a more feeble recovery than we here in the Atlanta region.

So when we see national labor market trends that show weakness in employment gains, it is particularly bad news here in the Southeast.

Photo of Michael ChrisztBy Mike Chriszt, an assistant vice president in the Atlanta Fed's research department