BY STEVE DINNEN
The economy is good (although this historically long recovery from 2008-09 is somewhat anemic). After stumbling in the fourth quarter of 2018, equities got off to their best start of the year since 1987 and, as measured by the Dow Jones and S&P 500 indexes, have posted year-to-date 2019 gains in the double-digit range.
“This growth trend has been very slow but steady,” said Cook, chief investment strategist at private wealth management firm Gilbert & Cook. He made his remarks at the midyear economic outlook sponsored by West Des Moines-based Gilbert & Cook.
No one is yet predicting an end to what by now is the longest expansion in history. Steve Jacobs, a president of business valuation firm BCC Advisers, hazarded a guess that “we’re in later innings of the game.” Yet, from his perspective, the mergers and acquisitions business remains strong. There is by now plenty of capital to fuel purchases, said Jacobs, although there is a problem in that not enough companies are available.
On the minus side of the ledger, Keri Jacobs, an economist and associate professor at Iowa State University, said storm clouds – literally – have persisted in the agribusiness sector.
Tax law changes first threw complications to farmers. Then the Trump-initiated trade war with China brought about retaliatory measures that have curbed sales of two cash crops that are near and dear to Iowans – pork and soybeans. And then the weather misbehaved, with heavy spring rains stalling or completely preventing planting, especially in southern Iowa.
“It was a trifecta of the worst things” to hit Iowa’s farmers, said Keri Jacobs. Government payments from insurance and trade relief will lessen the impact somewhat, but she still envisions more than $1 billion in losses.
If there is any good news here, Cook said, it is that on a macro scale, ag sector losses are targeted to a limited percentage of the national economy. Further, Keri Jacobs said that farmland values have not fallen as much as might be expected.
Though all good things come to an end, Cook noted that the nation had an economic expansion of 92 months that was interrupted in August of 1990 and then resumed for another 120 months starting in March of 1991 – 18 years in total. So it’s not chiseled in stone that the current expansion of 122 months is doomed to sudden collapse.
Returning to baseball analogies, Steve Jacobs asked whether the economy can now “go into extra innings.”