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First Quarter Shows Slowest GDP Growth in 3 Years

When data on the state of the United States economy in the first quarter of 2017 rolled in last week, it showed the slowest Gross Domestic Product (GDP) growth rate in three years. While most analysts say it is no cause for concern, we’ll take a look at some of the reasons why the year is off to a slow start.

First, a few caveats.

Taking a single three-month snapshot of the economy is a poor indicator of the current state of affairs or long-term vision. True, it does help shape opinions about the future and it can affect short-term market fluctuations, but it doesn’t mean the economy is screeching to a halt.

Second, no matter your opinion of Donald Trump, understand that the President has very limited control over the movement of the economy. Sure, policies can affect growth. But in this case, it’s too early for Trump’s policies, whether good or bad, to trickle down to massive changes on the consumer level.

Spring is often a time for low economic growth thanks to utilities. When people turn off their heat, those utility companies don’t get paid.

At the same time, the post-election and post-Christmas season is known to give consumers a bit of a hangover. Having both at the same time makes for a very rough awakening.

A dip in auto sales was another driver for the slow growth, but it came after several quarters of strong numbers for automakers.

Business investment was the saving grace for GDP numbers, contributing a 1.12 percentage gain with the primary category being development of oil infrastructure. While the president doesn’t dictate the economy completely, some economists attribute this business investment to the expected relaxation of regulations under Trump. After all, investment is all about speculation.

While the economy did struggle in the first quarter, making Trump’s goal of sustaining three to four percent annual growth unlikely for 2017, analysts are optimistic.

Record stock indices and the expected return on the current business investment paired with low unemployment spell a promising future for the economy.

Crop prices (May 2)

Rio Creek Feed Mill – Algoma

Commodity Price (per bushel) Basis
Corn $3.17 -0.61
New-Crop Corn $3.29 -0.66
Soybeans $8.80 -0.90
New-Crop Soybeans $8.79 -0.86
Wheat (SRW) $3.71 -0.85
New-Crop Wheat (SRW) $3.61 -0.95

 

Fox River Valley Ethanol – Green Bay

Corn $3.28/bushel -0.50
New-Crop Corn $3.50/bushel -0.45

Basis: The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).

Gas Price Averages

United States: $2.38

United States one year ago: $2.22

Wisconsin: $2.34

Wisconsin one year ago: $2.20

Northern Door: $2.44

Sturgeon Bay: $2.42

Other Commodities

Gold: $1,255.40/troy ounce

Silver: $16.83/troy ounce

Oil: $48.56/barrel

Sources: aaa.com, agweb.com, gasbuddy.com, money.cnn.com, Bloomberg Markets

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