A Purdue professor describes the economic outlook as “weak, slow and uncertain.”
Finance Professor Charlene Sullivan thinks a negative of the current economic situation is the lack of available credit, which is due to increased regulation in the credit market.
Despite that assessment, she says there are signs of improvement, such as increased consumer confidence and more stability in family finances.
“Generally, households are in a better position in terms of their debt relative to income, their debt payments relative to income. This low interest rate and low inflation environment that we have, has been very good for households.”
Sullivan says there is more demand for cars now, and the housing market seems to have turned around.
“Before the downturn, we had invested a fair amount in cars, appliances, and things like that – you can see that in the data. And so now, we almost have to replace, and maybe it is because people feel a little more optimistic.”
One thing that could hurt families financially is an expected 3.5% increase in food prices next year.
Purdue Agricultural Economics Professor Chris Hurt says the reason is this summer’s drought.
“As we saw the drought set in, it raised crop prices. That’s discouraging some producers, reducing supply. That means smaller per capita supplies next year and higher retail prices.”
He says you can expect to pay more for meat, milk and eggs, specifically beef because years of drought in the cattle-producing states of Oklahoma and Texas.
“Beef is probably the one product that we’re going to see the biggest reduction in supplies, and it’s going to take the longest time to get those supplies built up. That means higher and higher record retail prices on beef the next three years."
He thinks more corn will be planted in 2013, because the world-wide demand for the crop is so great, and South American countries have increased production of soybeans.
Hurt and Sullivan spoke Tuesday at the Greater Lafayette Commerce Economic Forecast Luncheon.
