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Creighton University Economics Professor Ernie Goss on the impact of the drought on agriculture, food prices and the overall economy.
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This country is -- the group of severe drop.
According to the US drought monitor report.
More than 44%.
Of the United States suffering extreme or exceptional dropped more than 62%.
Of the country experiencing moderate drop.
You didn't know there was such a thing did you.
The -- on this year's harvest is simply crushing.
Grain analysts say domestic corn inventories to fall to a seventeen year low by next summer following this year's harvest sort of being committed -- could drop to lowest level in 32 years joining us now is Bernie God's -- pre university professor of economics.
Whose report on the devastating economic consequences.
This -- and agriculture.
Very important and interesting to all of us -- for our -- good to have you with us.
Characterize this Robin historical terms is best you can.
Thanks -- Will the drought at least the business -- that we -- know this is fifteen states stretching from Oklahoma from Oklahoma Arkansas on the south to.
North Dakota Minnesota and north.
What we saw -- July was just a tough tough month affecting businesses that we surveyed a bank CEOs that we surveyed said this drought is now affecting.
The sale for example a farm equipment trucks and so also is beginning to affect not just agricultural economy.
But the overall economy.
The move the so called real economy that surrounds agriculture of course.
-- prices up 40%.
Since since June.
I mean we are starting to see some significant impact soybeans to be affected.
We don't yet know what will be affected as this growing season continues.
We do -- -- to do it doesn't appear to be relief in sight for this drop most parts of the country.
Right.
Oh absolutely and we asked the bank CEOs about ethanol plants near which use -- as an input corn prices are up -- percent from last year.
66%.
Had either cut back operations.
The farmers are obviously being hurt badly here.
In terms of prices because there are so many levels.
In the chain from the from the ignore the farmer to the marketplace itself.
Or whether it's feed stock or whether it is food on the table.
What do you.
Do believe the impact of these this drop.
May be mitigated somewhat how dramatic do you think the increase in food prices will be by next next spring.
Well USDA is part of agriculture says 4% -- say no way it's going to be.
Maybe as much as double that Lou we're seeing for example livestock producers are liquidating their herds because of the -- cost of feed.
Now that's showing up in lower.
Food prices in terms of beef and pork and poultry but that's we're don't see how much -- prices for last so far -- -- poultry and pork.
If that latter part of this year and the first part of next year.
I expect overall food prices to grow -- much more than what USDA says -- 4% could be six could be 8% give us your best estimate as we wrap up here because I hear you saying we're we're in for some significant impact.
As a result of this -- what do you expect to be the impact on GDP growth.
I think -- is going to pull it was at one and a half that's annualized and seasonally adjusted.
Is don't pull it down below 1%.
Now and that obviously we're getting close to return the remainder this year and you've talked on -- show about the fiscal clip which is another issue.
Putting that together they were that -- likely that a recession is continues to rise at least according to our three surveys that we conduct here each month are.
-- we thank -- appreciate it and let's hope that everybody gets from thank goodness dropped straight away.
