Economic Expansion To Slow in 2000

December 21, 1999

The U.S. economy continued near a 4% rate of expansion for the third year in 1999, but the increase in gross domestic product (GDP) next year should slow slightly to 3.5%, according to USDA. Also in the latest Agricultural Outlook issue, USDA economists find a wide gap between types of payments made to ensure some minimum standard of living for farm households.

USDA says more than 2.5 million jobs will be added in 2000, and compensation will increase 3.6%, triggering a strong increase in personal income. "Solid consumer spending growth brought on by rising personal income and stock market returns in 1999 will slow in 2000 but should be quite strong, reflecting high consumer confidence."

Another article deals with the concept of government assistance to agriculture based on ensuring some minimum standard of living for farm households. Using examples from existing federal programs that assist low and middle income households, the Economic Research Service constructed several safety net scenarios for assisting farm households, retaining current government commodity programs.

Results indicate that households of almost all farms classified as "limited resource" in the ERS farm typology would receive safety net payments compared with fewer than one-fifth who received direct government payments in 1997.

Total safety net payments going to households of family farms with annual sales greater than $250,000 would be half the amount of direct payments made to farmers in 1997.

Other articles in the January-February Ag Outlook, available electronically later this week, focus on agricultural trade and the international financial crisis, growing pressure on China's water resources and a declining cigarette consumption.

A summary of the latest edition is on the Internet at http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/1999/ao268s.asc.