Market analyst: Economy, ag industry looking up
WORTHINGTON -- Mark Pearson, host of the Market to Market program on PBS, provided an agricultural outlook to the next generation of crop and livestock producers Thursday morning during a visit to Minnesota West Community and Technical College's ...
WORTHINGTON -- Mark Pearson, host of the Market to Market program on PBS, provided an agricultural outlook to the next generation of crop and livestock producers Thursday morning during a visit to Minnesota West Community and Technical College's Worthington campus.
Pearson, of central Iowa, met with high school and college students in the morning, and was guest speaker at the Nobles County Corn and Soybean Growers banquet that evening.
"There is no industry out there that has a product that is consumed three times daily by everybody, except what we do," Pearson told students as he led into a presentation about the state of the global economy and the demands that will be placed on the agricultural industry.
In a recap of the general economy, Pearson said government spending is a huge issue with spending exceeding revenues in each of the past 40 years. Social Security, Medicare and Medicaid are the biggest challenges, and Pearson said the growing deficit has left the country with a cheapened dollar and cheapened confidence in the dollar among people overseas.
"It's a huge issue," he said. "We need to get control of this deficit."
The U.S. is not alone -- the same is happening in countries throughout the European Union. As the deficit woes continue, Pearson said the global economy is growing at a pace of 3.5 percent per year.
"Our U.S. economy is driven by people spending, and consumers really backed off when the recession hit," he said. In June 2010, the market began to show signs of a rebound, and that continues today.
"We have just finished this last capital markets bailout, and I think it, too, is going to lead to a period of huge growth and prosperity in the United States," Pearson said. "Consumers are sensing it and consumer confidence is starting to build."
He shared with the students comments from an investor friend that 10 bad years in the stock market, 100 percent of the time, are followed by 10 "very good, above average return years."
"It's a good time to start investing in equities, a good time to start buying American," he added.
Pearson also told the crowd that gold is a "crappy investment" and said it is not a place for long-term investment.
At the beginning of his presentation, Pearson told students to remember the number 9.5 billion. After talking about the global economy, he moved into the agricultural economy and the need for the world to double its food production efforts by 2050.
"The most important thing we have in America is food production, No. 1, and the second thing is energy production and the ability to bring energy in," he said.
The U.S. burns roughly 13 million bushels of corn per day as ethanol and that market isn't about to go away, said Pearson. The nation is on target to produce 16 billion gallons of ethanol per year by 2016 to meet a federal mandate, and the refiners love the product.
"We have extremely high corn prices right now, strictly because we are growing corn for feed demand and, most importantly, for ethanol," he added. "The government's decision is we need to produce more fuel."
Meanwhile, 100,000 Chinese people are joining that country's middle class each day. With more discretionary income, they're choosing to eat better, which means they're buying meat, milk and eggs. Soy protein is the No. 1 demand protein in the world, said Pearson, and it's grown right here in the Midwest.
"That's where your opportunity is," he told the students.
In the coming years, America will spend a lot of money on food technology and production technology to meet the world's demands.
"This is just going to blow away what Silicone Valley did in California -- it's going to blow that away here in the Midwest," said Pearson. "We are the one place people can count on for production. That's what your opportunity is -- that's what 9.5 billion means."