U.S. Economy

It’s difficult to ignore the impact that the general United States economy has on agriculture, which is a core economic driver across the country and has widespread impacts even beyond the production of food, fuel, and fiber. The following is a review of key economic factors and their influence on the U.S. agricultural industry.

Inflation, as measured by the Personal Consumption Expenditures (PCE) method, is expected to be 3.3% in 2023 compared to 5.5% in 2022 and 5.7% in 2021, according to the Congressional Budget Office (CBO).1 The PCE inflation rate is expected to be 2.4% in 2024 and achieving the Federal Reserve’s goal of 2.0 by 2026.

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The most recent values available for selected product groups are shown in Exhibit 1.2 Food leads the index increase at 9.35% over February 2022. The CPI is expected to continue falling throughout 2023 then rise back to a level just shy of 4.0% in late 2023 and 2024 according to the Federal Planning Bureau, as seen in Exhibit 2. These projections are based on futures quotes as of February 2023.

12-month percentage change, Consumer Price Index, selected categories, February 2023, not seasonally adjusted

1 The Economic Outlook for 2023 to 2033 in 16 Charts. Congressional Budget Office. Publication 58880. 2023. https://www.cbo.gov/system/files/2023-02/58880-Economic-Outlook.pdf

2 U.S. Bureau of Labor Statistics – CPI Charts. https://www.bls.gov/cpi/