ORLANDO, Fla. ― Looking back a few years to 2008 and 2009, it’s obvious that dairy sales growth is intrinsically linked to the economic growth in the U.S. and the world at large.
Because of the global economic recession in 2008 and 2009, U.S. dairy exports declined, which had a negative impact on sales. The decline in restaurant traffic during that time also had a negative impact.
So, attendees at the International Dairy Foods Association annual meeting were anxious to hear from the chief economist of the U.S. Chamber of Commerce on Monday.
According to chief economist Martin Regalia, a number of factors, such as housing, employment, Federal Reserve policy and what’s going on in Europe, are pointing in the right direction.
“We’re finally starting to see housing improve,” he said.
An improvement in the housing market will create real wealth, and wealth and disposable income are the main drivers of increased consumption.
The Federal Reserve Bank has pumped a lot of money into the banking system, he said. Although the Fed really hasn’t gone out and asked the banks to lend to consumers, it now appears that lending on the rise.
There has been improvement on the employment front, as well.
These are things that should stimulate gross domestic product (GDP) growth in the coming year.
For almost three and one-half years, there has been growth in GDP ― “the problem is we haven’t been growing fast enough,” Regalia said.
“We’ve averaged 2.3 percent (GDP growth) since the middle of 2009,” he added. (It should be noted, however, that there was negative GDP growth in the fourth quarter of 2012.)
That rate should improve and maybe get up to 3 to 3.5 percent next year, he said.
Yet, a cloud hangs over the economy, and that is the growing national debt. Congress has several deadlines between now and the end of May to address the debt issues.