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As we move into 2012, the production of agricultural staples such as corn will play an important role in boosting US economic growth. Domestic corn usage has grown from almost 8 billion bushels in 2000 to just over 11 billion bushels in 2011. The USDA reports farmers in 2012 are preparing to plant the most corn since 1944.

Economic growth occurred through January 2012, as evidenced by the US Industrial Production data released by the Federal Reserve this morning. The actual monthly Index of our nation’s industrial output rose from the prior month and is now at its highest point since August 2008. Additional growth is expected.

A business acquaintance posed this question to me:

“What would you say if you were in a room with the President, Speaker of the House, and Senate Majority Leader?

What a great question! I answered with three points:

A recently released report from the US Energy Information Administration provided good news about the future of US energy dependence. Net imports of energy now account for just 22% of US energy consumption. This number stands in stark contrast to the 30.8% share that imports held in 2005.

Based on the most recent data from federal sources (graphed below), we can expect a reduction in the federal budget deficit beginning this year and extending into 2016 (Office of Management and Budget estimate) or into 2017 (Congressional Budget Office estimate). This is obviously good news since it means the nation will be incurring debt at a slower pace for the next five or six years. These projections fit well into our forecast of economic growth in the US through 2017, except for a relatively mild 2014 recession.

The US economy has completed its recovery from the last recession in the late 2010; however, unemployment remains stubbornly high.  The December non-seasonally adjusted unemployment rate was 8.3%.

Dr. Bernanke and the FOMC announced their interest rate projection yesterday.  It deserves a few comments.

1. The fact that the FOMC is expecting to keep interest rates essentially flat well into 2014 means that they expect unemployment to remain high, inflation to remain quiet, and the economy to remain troubled for that long.  We are expecting a better 2012 than the Federal Reserve Board seems to be anticipating.
2. We believe that this decision will hurt the lending environment.

As elected officials and political candidates wax eloquent about their plans to restore the economy and “put America back on track,” we would like to take the opportunity to provide our own evaluation of the state of the economy. It can be a bit challenging to believe that 2012 will be better than 2011. The past year’s headlines screaming “Double-dip Recession!” or “European collapse imminent!” distracted many from the steady stream of positive economic news.

It may be painful, but go back in your mind to 2008. There was great uncertainty in the financial markets and in the banking industry. Trust was gone. Over-valued toxic assets were ruining balance sheets and investor confidence. Then, the Federal Reserve Board announced its $700 billion TARP, which was suppose to make everything better. Yet, doubt and fear prevailed, and the US economy sank into the Great Recession.

The USA has gas - a lot of it. We are of course talking about the supply of natural gas in this country; a supply that has become more abundant because of shale-gas and fracturing. The logical economic spin off benefit from this supply trend is remarkably low pricing for this important energy source. The favorable pricing looks likely to continue and it is changing people’s plans on everything from constructing coal, wind, and nuclear power facilities to providing a competitive edge to manufacturers who use natural gas as a primary source of energy.