Kiplinger’s economic forecasts – Weighing the advantages and disadvantages of business expenses.

Companies’ price for materials and components has a significant impact on the economy, affecting the price we pay for basic necessities. Therefore, it is important to stay informed about key developments in this market to make better financial decisions. To receive updates, you can subscribe to The Kiplinger Letter or get a free issue.

There is some good news in the slowing economy, as manufacturing costs are finally easing. After years of supply chain disruptions, shipping delays and high prices for raw materials, inflation is not yet contained, but the slowdown in commodities and capital goods is helping to lower prices.

New orders for capital equipment have peaked following the pandemic surge, and unfilled orders are back to pre-pandemic levels. While some equipment shortages remain, industries like automotive and aerospace continue to thrive on orders for precision-machined equipment. However, most manufacturers are pulling back over concerns about demand and tighter credit, as banks become cautious about lending.

Most material prices have fallen or will soon fall, which will help lower the cost of manufacturing and construction. Energy costs may diverge as oil remains up while natural gas prices have receded from last year’s peak. Gas costs may remain modest, which is welcome news for gas-using industries.

Freight rates have dropped significantly due to increased shipping demand, and companies now face a dilemma about whether they should return to sourcing goods from Asia as shipping costs drop. The risk of future geopolitical crises leading to disruption is a major consideration.

The Kiplinger Letter has been providing reliable forecasts on business and the economy, and what to expect from Washington since 1923. To get a free issue or subscribe, visit their website.

Leave a Reply