Measuring the U.S. Economy
January 1, 2008
Measuring the U.S. Economy
The U.S. Census Bureau wants to help you make informed decisions. To that end, the bureau has issued its five-year call for information about your business to update its database. This is the official measurement of the American economy.
A major change concerning America’s economy came with the appointment of Ben Bernanke, the current Federal Reserve Chairman, who in 2006 succeeded Alan Greenspan – America’s money man for 19 years. Bernanke notes that the economic census, which is the primary benchmark for the nation’s gross domestic product estimates and other indicators of economic change, is “indispensable to understanding the American economy.”
Nobody needs to tell the meat protein business about the impact of economic change in the marketplace, especially tied to major gains and losses that have defined the past five years or so, to say nothing of changes on the geo-political front. The landscape is decidedly different in the new trading world, for one thing, due to such potential growth engines as biofuels and the rapid expansion in global markets. Environmental and energy concerns have rapidly moved up on business agendas evidenced by such ventures as processing-industry plans to use fats and oils to help generate fuel to offset America’s dependence on oil from the Middle East. Meanwhile, the industry is also doing its part in the new greening-of-America movement. Labor problems have heated up in the wake of immigration-reform noise from federal legislators. The price of immigration reform is high with estimates in the billions of dollars to implement programs.
If profits are the goal, food safety is the means to that end – never more so than in these turbulent times. The industry and FSIS provided tremendous grist for the media, especially this year as each grappled with food-safety issues – both proactively and reactively. The Centers for Disease Control and Prevention estimates the cost of foodborne-disease outbreaks at more than $8 billion annually.
If that isn’t enough, studies this year linked red-meat consumption to cancer. The World Cancer Research Fund deduced that high consumption of red meat, including processed meat was associated with a 30-percent increase in the risk of colorectal cancer. Meanwhile, researcher behind an on-line study determined that dietary fat from meat compounds formed during high-temperature cooking may increase the risk of cancer. Some critics argue that as threats to the food supply increase, food-safety regulations have weakened. The recent spike in product contaminations linked to E. coli O157:H7 has prompted the industry, scientists and regulators to reassess strategies in the fight against that pathogen.
Inspection reform is another key agenda item for USDA, which is revising its system of plant inspections to offset budget cuts and other operating concerns.
Whatever the issue, the industry needs to know the shape of the economy, which to my mind also involves the impact of global activities in determining the true makeup of profit centers. A critical issue involves the U.S. government’s financial policy resulting in a shift from a budget surplus in 2000 to an overwhelming deficit by 2006 reflecting about a 5.6-percent shift in gross domestic product, as reported in A Deloitte Research Study covering 2007 that also raises this question: “Is a crisis imminent, or are things better than we thought?” The best strategy is to assume, or at least prepare for, the worst, the study surmises. Financial hedging is one approach, but the study suggests that companies should instead diversify the locations of their operations including production, distribution and selling. Bottom line, however, is that “there is no adequate way to prepare for the economic convulsion that could be the byproduct of a financial crisis.”
Enter the economic census, which the bureau reminds us affects every American who runs a business, saves for retirement or takes out a home mortgage.
“The economic census is much like the 10-year population count most people are familiar with,” Harvey Monk, the Census Bureau’s assistant director for economic programs, explains. “Economic census forms that businesses are to receive at the end of the year will tell us how our economy is changing. We urge businesses to take advantage of the information available to them from the economic census and to watch for their census forms.”
Do take heed.