Armada managing director discusses the future of the economy in a preview of Connections 2022 supply chain conference remarks
Authored by SMC³ on June 7, 2022
At Connections 2022 – scheduled for June 27-29 in San Diego, C.A. – logistics and supply chain leaders will gather to discuss everything from supply chain education to navigating regulatory hurdles and predicting the next wave of disruption.
During this year’s event, Chris Kuehl, managing director with Armada Corporate Intelligence, will provide critical insight during the global and domestic economies sessions. Kuehl recently took some time to discuss with SMC³ his predictions for the rest of the year and beyond, and the indicators that will shape global economics.
During Connections, you are moderating the U.S. financial update panel. Without giving too much away, what are some of your predictions for the future?
Now is probably a good time to remind people that the definition of an economist is someone who explains tomorrow why the predictions made yesterday didn’t come true today. My goal of late has been to talk people off the ledge. I do NOT see a recession this year (but a downturn of a quarter or two is possible). I see inflation subsiding by year’s end and some significant progress on the supply chain breakdown. But (and there is always a but) it depends on the Ukraine war and sanctions on Russia as well as a recovery in China. If the war and sanctions drag on and China sticks to the lockdown there will be little change.
How do you see the global economy growing in the next year?
Slow growth but not recession. Global growth around 3.0% (far slower than last year). Picking up speed towards the end of the year and moving closer to 5.0% in 2023.
Do you think the inflation rate will increase going into 2023?
No. It is more likely to decline. It is being driven by energy prices and the supply chain issues. If these are addressed (and they might be), rates would drop back to levels the central banks would tolerate (3.0%). All are being cautious right now as they know that rate hikes will not affect the current inflation situation all that much. All eyes are on wage hikes and the latest data suggests that we might have hit a peak in terms of wage increases (fell from 5.6% to 5.2% gains).
What do you think are a few indicators that will shape global economics in the year ahead?
Watch some of the industrial indicators such as the Purchasing Managers’ Index (which is still firmly in positive territory), capacity utilization (very close to the normal range between 80% and 85%), capital investment (still strong), the New York Fed’s recession monitor (still showing less than a 6% chance for 2022 or 2023 recession). Armada does a transportation demand index which has shown capacity improvement and an industrial index that shows growth by year’s end. The bad news to focus on will be energy prices (expected to stay around $110 a barrel), Diesel prices are prohibitively high. Consumer spending has slowed but no sign of real panic yet.
To hear more from Chris Kuehl and other supply chain and logistics experts, register today for the Connections 2022 supply chain conference.