What's going on?
Deere – the world’s biggest agricultural equipment-maker – posted better-than-expected quarterly results on Wednesday.
What does this mean?
It’s a good time to be a farmer: the US reckons they’ll earn 20% more money this year than last, and the most they’ve made in eight years. And Deere’s been happy to help: sales of its big and small equipment climbed by 23% and 17% respectively last quarter compared to the same time last year, helping push overall profit up by a better-than-expected 69%. And since the company reckons the boom in demand will continue, it gave a better-than-expected profit outlook for 2022 too. That’ll do, pig: investors initially sent Deere’s shares up 4% after the news.
Why should I care?
The bigger picture: America’s looking up.
Deere’s strong results are a good sign for America as a whole: the company’s an economic bellwether, meaning high demand for its products suggests the wider economy is firing on all cylinders. Data out on Wednesday backs that up: it showed that claims for US unemployment benefits fell to their lowest in 50 years last week.
Zooming out: Will the Fed step up?
The US isn’t out of the woods yet, mind you: supply chain shortages are still plaguing the country’s businesses, with inflation at its highest level in 30 years. Combine that with Wednesday’s jobs data, and the Federal Reserve might need to start thinking about raising interest rates sooner than planned next year. But it’ll have to be careful: higher rates could end up slowing down price rises, sure, but they could also deter spending and knock the recovery off course altogether.