Product Lead Times and Raw Material Costs Are Coming Back Down to Earth

AUSTIN, Texas - Oct. 13, 2022 - PRLog -- During the Covid pandemic, commodity prices went crazy and lead times skyrocketed. Are things getting better? We take a look at the state of supply chain logistics in this Formaspace research article.

High Inflation, High Dollar, But A Lower US Trade Deficit

• Mixed Signals – Energy Costs Are Driving Prices Up While A High US Dollar Is Driving Import Prices Down

Everyone, including the Federal Reserve, is trying to figure out today's economy.

The war in Ukraine is clouding the economic forecaster's crystal ball. Fighting is not only taking place on the battlefield but also in the world's energy markets, with sanctions and counter-sanctions driving up the price of energy (especially in Europe).

Earlier in the summer, $5 gas and 9% inflation led the Fed to raise interest rates. So far, employment remains high, but 5% mortgage rates quickly cooled the red-hot housing market, decreasing demand for home goods.

Recently, US oil dropped to under $90/bbl, and gas fell to $3.75. However, Europe is seeing record natural gas prices, and the risk of a European recession is seen in the exchange rates. In a first, the dollar reached parity with the Euro, and the UK Pound is at a 35-year low.

The high dollar helped reduce our trade deficit by 12.6% in July, and it's helping to blunt the inflation rate, which could hopefully help us stave off a recession here at home.

China's Manufacturing And Economic Outlook

• After Covid Lockdowns, Ch

Unlike the West, China has a zero-tolerance policy against Covid. For manufacturing companies, a Covid outbreak can lead to immediate lockdowns, as Tesla experienced recently at its Shanghai factory. Factory production across China has also been interrupted by power shortages caused by extreme heat, droughts, and floods.

The economy is also slowing due to rising inflation and fears over a property market bubble. While exports are still rising (7.1% year on year), that figure is down from July's 18% year-over-year gains. Significantly, Chinese consumers are cutting back on e-commerce purchases after years of rocketing growth. The Yuan currency fell to a two-year low against the US dollar, causing China's central bank to prop it.

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