Decline in Farm Income Slows but Persists

Despite moderate increases in prices of key agricultural commodities, District bankers reported that farm income and spending continued to decrease. The decline in the first quarter makes 2018 the fifth consecutive year that bankers have reported lower farm income than the year before (Chart 1). Although household spending and capital spending also have continued to decline, the pace of the decline in capital spending, which has historically followed farm income, has been relatively slower. Changes in farm income now seems to be more in line with changes in household spending, as farm households have attempted to adjust to lower incomes by reducing their expenses.