Drought and the Economy

I encourage everyone to continue praying for those affected by the shooting in Colorado.  I know the blogosphere has been full of commentaries on the shooting but I believe what the victims and their families need most is time to heal and grieve for their losses.  Therefore, this posting will not be discussing the shooting.  Instead, I am going to look at the drought and the impact it may have on our fragile economy.

In case you had not noticed, it is unusually hot and dry this summer.  However, I still do not believe the heat this summer proves there is global warming because I can remember other hot summers.  I believe this is just an unusually hot summer and believe we will most likely have cooler summers in the future.  However, this does not provide comfort for the many farmers in the Midwest who are seeing their crops shrink due to the intense heat and drought.  Especially hard hit are corn farmers.  The shortage of corn is already causing prices for corn to rise over 30 percent in the last month (1). 

With the economy struggling to come out of the recession and with many out of work, the prospect of major increases in the price of food could be disastrous.  There is already much uncertainty brought on by the prospect of tax increases and increased taxes and regulations due to implementation of Obamacare so the possibility of a double dip recession is becoming even more real.  Standard & Poor’s placed the odds of returning to recession at 20% (2).  The Standard and Poor’s numbers came out in June so they most likely did not factor in the effect of the drought so the odds may actually be even higher. 

The last time we faced a similar drought was in 1988 (1).  However, in 1988 the nation was experiencing a period of prosperity whereas today we find ourselves in the middle of an economy struggling to recover.  This makes the prospect of inflationary food prices even more devastating on individuals who have seen their incomes and wealth reduced due to the recession. 

This makes it even more important for voters to elect leadership committed to policies that encourage economic growth in the private sector instead of bigger government.  The drought is a fact and there is little any of us can do to reverse its effect but if people begin seeing increases in their income and wealth, the effect of a price increase on food  will not have as big an impact on their family budgets. 

We must also maintain the current tax rates for everyone while protecting individuals and businesses from additional taxes and regulations of Obamacare by fully repealing the legislation.  This will enable individuals and businesses to weather the storm.  We also pray for a cooler and wetter summer next year. 

1. Ellyatt, Holly. Drought Hits Corn Crops: 1988 All Over Again? cnbc.com. [Online] CNBC, July 24, 2012. [Cited: July 24, 2012.] http://www.cnbc.com/id/48297324.

2. Thomson/Reuters. S&P: US Faces 20% Risk of Double-Dip Recession. newsmax.com. [Online] Newsmax, June 26, 2012. [Cited: July 24, 2012.] http://www.newsmax.com/StreetTalk/S-P-US-Recession-dip/2012/06/26/id/443539.