Paul Hodges, Chairman of New Normal Consulting and author of The pH Report, discusses the current inflation outlook and how the geopolitical landscape is driving energy and food prices. He also shares his outlook on China and emerging markets.
The chemical industry's significant downturn and low operating rates indicate a potential global recession.
Short-term supply chain disruptions and geopolitical changes are driving up food and energy prices, signaling potential inflationary pressures.
Deep dives
The Chemical Industry as an Economic Indicator
The chemical industry, being at the start of the value chain as the third largest industry in the world, serves as a leading economic indicator. Currently, the chemical industry is experiencing significant downturn with operating rates at around two-thirds globally, indicating a potential recession.
Disruptive Factors in the Economy
The current state of the economy is characterized by volatility, uncertainty, complexity, and ambiguity (VUCA). Contradictory signals are being observed, such as increased household purchases during lockdowns, but also an extended period of continued high demand. Additionally, factors like aging populations and a shift towards renewables are leading to complexities in market dynamics.
Inflation and Supply Issues
Short-term supply chain disruptions and geopolitical changes are causing higher food and energy prices. The war in Ukraine has resulted in a sudden reduction in fertilizers, impacting food production. Moreover, El Niño is affecting rice production, leading to export bans and further food price increases. These factors, coupled with rising oil prices and OPEC+ influencing gas prices to impact the US presidential election, signal potential inflationary pressures.
🔥 JOIN the New Real Vision http://www.realvision.com/pricing
Paul Hodges, author of The pH Report and chairman of New Normal Consulting, joins Maggie Lake to discuss the current inflation outlook, how the geopolitical landscape is driving energy and food prices, and how today's ISM services data could impact the Federal Reserve's September interest rate decision.Plus in the second half, Paul will share his outlook on China and emerging markets.You can find more of Paul's work here: https://t.co/d5mkV0QuBb