Back to the 80s?
As we’ve watched interest rates climb, there’s always that underlying worry of “going back to the 80s.” An 80s baby myself, it’s a reality I know only enough about to understand we don’t want to go back there.
How high did they get in the 80s? A quick Google search led me to a story from BankRate.com. According to their website, the fed funds rate began the 80s at a target level of 14 percent in January 1980. By the time officials concluded a conference call on Dec. 5, 1980, they hiked the target range to 19-20 percent, its highest ever.
Why am I bringing up scary stories from the past? To bring what is hopefully a bit of reassurance. Randy Dickhut, farmland analyst for Agricultural Economic Insights, says there is one major difference between now and where we were forty years ago…
“There was more debt. Farmers bought land and interest rates, and all that, so it had a double squeeze. It cost them more to own it, plus their incomes were down. Today, farm incomes, even for 2023, farm income, in general, for the country is still above what it was previously.”
This comes as a recent report from the USDA’s Economic Research Service says farm sector debt tied to real estate will hit a record high in 2023.