The prices businesses pay for materials and components have a major impact on the prices we pay for essential goods and therefore the wider economy. So to help you make better investments and other financial decisions we will keep you in the loop on major developments in this market (Get a free issue of The Kiplinger Letter or subscribe). You will get them first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
One silver lining of the slowing economy: manufacturing costs are finally easing after years of snarled supply chains, shipping delays and spikes in the prices of many key materials.
Inflation is far from vanquished, but the slowdown in commodities and capital goods prices is welcome.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Orders for capital equipment have peaked following the pandemic surge. Adjusted for inflation, new orders are down 6% from last year. Unfilled orders are back to the pre-pandemic average. Some equipment shortages remain, especially for electrical gear and HVAC systems. Autos and aerospace are still humming and fueling orders for precision machining equipment.
Most manufacturing sectors are pulling back owing to concerns about demand and tightening credit; the result of banks growing more cautious on lending. That means less competition and smaller price hikes for the companies that do purchase new equipment.
Most materials prices have dipped, or will, cooling the cost of manufacturing and construction.
Energy costs may be poised for diverging paths
Oil is up and natural gas is down. Oil prices have fallen lately, but demand is outrunning supply. Stocks of crude oil and gasoline in the U.S. are low, and oil use is rising briskly in Asia, especially China. Several disruptions to supply, from the Middle East to Canada, could push up prices later this year unless the global economy really stumbles. Russia is exporting more oil than initially expected, despite stiff Western sanctions. But OPEC is cutting back.
Meanwhile, natural gas prices have pulled back from last year’s peak. A mild winter in the U.S. and Europe kept demand in check, and now U.S. stockpiles of stored gas are well above normal. Extreme heat this summer could fire up demand for electricity, and thus gas, since the U.S. relies heavily on gas for power generation. But for now, it appears gas costs should stay modest, which is good news for the many industries that use it.
Finally, freight shipping rates have fallen significantly and are back down to their pre-pandemic levels, or lower, now that shipping demand has slackened.
The dilemma for companies: whether to go back to sourcing goods from Asia, as shipping costs are down, and risk disruptions from a future geopolitical crisis.
This forecast first appeared in The Kiplinger Letter. Since 1923, the Letter has helped millions of business executives and investors profit by providing reliable forecasts on business and the economy, as well as what to expect from Washington. Get a free issue of The Kiplinger Letter or subscribe
Read more
-
Stock Market Today: Stocks Close Mixed Amid War Angst, Nvidia AnxietyMarkets went into risk-off mode amid rising geopolitical tensions and high anxiety ahead of bellwether Nvidia's earnings report.
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
Kiplinger Outlook: Telecom Companies Brace for Tough TimesThe Letter The telecom industry is entering a new era that threatens profitability. But the coming Trump administration will make it easier for the major players to adjust.
-
Start-ups Trying to (Profitably) Solve the World’s Hardest ProblemsThe Letter More investors are interested in companies working on breakthrough science to tackle huge societal challenges. The field of deep tech has major tailwinds, too.
-
The Big Questions for AR’s FutureThe Letter As Meta shows off a flashy AR prototype, Microsoft quietly stops supporting its own AR headset. The two companies highlight the promise and peril of AR.
-
China's Economy Faces Darkening OutlookThe Letter What the slowdown in China means for U.S. businesses.
-
AI Start-ups Keep Scoring Huge SumsThe Kiplinger Letter Investors continue to make bigger bets on artificial intelligence start-ups, even for small teams with no revenue. Some backers think a startling tech breakthrough is near.
-
Should We Worry About the Slowing U.S. EconomyThe Letter With the labor market cooling off and financial markets turning jittery, just how healthy is the economy right now?
-
New Phones Get All the Hype, but Consumers Still Love Old Models
The Letter Even as flashy artificial intelligence features drive sales of new smartphones, used phones continue to fetch big bucks as demand outstrips supply.
-
Starlink's Internet Beamed From Space Is Taking OffThe Kiplinger Letter Satellite broadband provider Starlink is taking over the space market. Amazon’s mega-constellation will soon join the fray, adding to the unprecedented disruption.
