In the build up to this SMU Summit we spoke to Dr. Alan Beaulieu of ITR Economics, who will once again be a keynote speaker at this year’s event.
Dr. Beaulieu will be providing his views on the economy, specifically on where we are in the business cycle, and what companies should be doing to prepare for what’s coming next.
Considering the meltdown of the stock market, I asked Dr. Beaulieu a few questions regarding the market and where we stand on the timing of the Great Depression ITR has forecast for 2030.
Regarding the Great Depression, Dr. Beaulieu told me, “We are still on track for 2030, not earlier. What we are experiencing was expected; inflation and the stock market is also not surprising. Neither change the timing.”
With many economists forecasting a deep recession for 2023, I asked him what his current thoughts are. “We have done our due diligence and so far, there is no need for us to change our forecast of a very mild rise in 2022 and a flat first-half 2023. Things could change because of Russia’s war on Ukraine but so far, the consumer, business activity, personal and business liquidity, availability of credit, growth in personal disposable income compared to pre-covid, wage increases, and job availability all bode well for now," he said.
Regarding interest rates Dr. Beaulieu told me, “The interest rate rise so far is not a problem, but we will keep watching it. Talk a couple weeks ago about an inverse yield curve was nonsense. The Fed quantitative tightening is worrisome but not a near-term issue. Let’s hope they don’t go too far.”Steel Market Update pegged the average hot rolled price at $1,350 per ton ($67.50/cwt) and galvanized base price average at $1,725 per ton ($86.25/cwt plus extras) this week.
I was speaking with the head of commercial for one of the domestic steel mills earlier today and he referred to the market as having “active competition.” In other words, the domestic mills are looking for orders, and prices are reflecting that need.This mill made an interesting statement about the domestic mills “weaning” their customers off of foreign steel. I was told to expect foreign steel imports to shrink by somewhere between one-third and one-half of what they have been over the next few months. By later this year, this mill believes imports will drop by two-thirds.*When asked where they thought flat rolled prices would bottom, I was told $1,000/ton ($50.00/cwt) on hot rolled and $1,300 per ton ($65.00/cwt) base on coated products. Compared to where we are this week this would mean we could see a drop of another $350 per ton ($17.50/cwt) on hot rolled, and $425 per ton ($21.25/cwt) on coated.