Jason Henderson
Vice President and Branch Executive
Federal Reserve Bank of Kansas City – Omaha Branch
www.kansascityfed.org/omaha
September 28, 2009
The views expressed are those of the author and do not necessarily reflect the opinions of the
Federal Reserve Bank of Kansas City or the Federal Reserve System.

Financial Crisis

Economic Recession

Inflation and Federal Reserve exit strategy

Financial Risks to Agriculture
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
LIBOR-OIS Spread
Basis Points
3-month
1-month
Source: Federal Reserve Board of Governors
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
U.S. Commercial Real Estate Vacancy Rates
Percent
Percent
Office
Industrial
Retail
Multifamily
Source: Torto-Wheaton Research
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division

Financial Crisis

Economic Recession
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Real GDP Growth
Annualized percent change from previous quarter
Blue Chip Forecast
Source: Bureau of Economic Analysis and Blue Chip Economic Indicators
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
U.S. Monthly Retail and Food Sales
Billion dollars
2008
2007
2006
2009
Source: U.S. Census Bureau
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
U.S. Non-farm Job Growth and Unemployment Rate
Change from previous month (Thousands)
Percent
Unemployment
Rate
(Right Scale)
Job Change
(Left Scale)
Source: Bureau of Labor Statistics
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Assets Held by Households and Nonprofit Organization
Trillion dollars
Source: Federal Reserve Board of Governors
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Personal Savings as a Percent of Disposable Income
Percent
Source: Bureau of Economic Analysis
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
U.S. Food Sales
Percent change from previous year
Source: USDA
2009 data are year-to-date through August
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
U.S. Per Capita Expenditures on Beef, Pork, Poultry, and Milk Products
Percent change
Calculations based on Bureau of Economic Analysis data
* The National Bureau of Economic Research indicates the recession started in Dec. 2007. At the time of
publication, the end of the recession has yet to be specified.
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Real Net Exports of Goods and Services
Billion dollars
Source: Bureau of Economic Analysis
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
GDP Growth
Annual percent change, constant dollars
Projection
China
World
U.S.
Source: International Monetary Fund, April 2009
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Estimated Budget Impact of
American Recovery and Reinvestment Act (ARRA) of 2009
Billion Dollars
Source: Congressional Budget Office, February 13, 2009
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division

Financial Crisis

Economic Recession

Inflation and Federal Reserve exit strategy
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Central Bank
1
2
Short-term
interest rates
Bank Reserves
3
Bank Credit
Excess
Reserves
Long-term
Interest rates
Economic
activity
Source: Gordon Sellon (2003) “Monetary Policy and the Zero Bound: Policy Options When Short-Term Rates Reach Zero”
Economic Review http://www.kansascityfed.org/Publicat/ECONREV/PDF/4q03sell.pdf
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Federal Reserve Balance Sheet: Assets
Billion Dollars
Source: Federal Reserve Board of Governors
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Fed Funds Rate
Percent
Source: Federal Reserve Board of Governors and CME Group
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division

Financial Crisis

Economic Recession

Inflation and Federal Reserve exit strategy

Financial Risks to Agriculture
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Percent
Charge-off and Delinquency Rates on
Agricultural Loans
Source: Federal Reserve Board of Governors
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Collateral Requirements and Loan Maturity on Non-Real Estate Loans
Diffusion Index
Months
Average Maturity of
Non-Real Estate Loans – U.S.
(Right Axis)
Collateral Required
Tenth Federal Reserve District
(Left Axis)
Source: Federal Reserve Bank of Kansas City and Agricultural Finance Databook
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
U.S. Farmland Values
Dollars per acre
Source: USDA
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
Domestic Debt Outstanding
Percent of GDP
Financial Business
Household
Nonfinancial
Business
Source: Federal Reserve Board of Governors
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division

The financial crisis and recession appear to be ending .

Risks surround the recovery.

The outlook hinges on consumer spending.

As the recovery strengthens, questions will switch
from growth to inflation.

Will the recovery lift agricultural demand in 2010?
Federal Reserve Bank of Kansas City – Omaha Branch
Regional, Public and Community Affairs Division
For More Information
Federal Reserve Bank of Kansas City –
Omaha Branch
www.kansascityfed.org/omaha