Demand Increasing?

According to an article in BusinessWeek published back in July the global demand for commodities is on the rise. Foreign countries such as China and India are "snapping up" commodities as they see signs of global economic improvement. The article also states that companies are adjusting their inventories of raw materials because even though there may be signs of improvements there is still a great deal of uncertainty. The article infers that a recovery in commodities is a first step in economic recovery.

What are your thoughts? Has the global economy begun to recover? Were there signs of recovery as early as July? Is it smart for companies to re-stock their inventories based upon these signs of recovery?

In small town Southern Utah I sure don't see signs of recovery. I work in an industry where it would definately be nice to be recovering. Based on the latest economic data the current White House sure preaches the recovery has begun. I hope demand is on the rise in all sectors and that the recovery will take place in the near future.



Daniel said...

Your question regarding economic recovery is the “million” dollar question. Unfortunately, I think its going to be years before we experience a full recovery and frankly the irresponsible actions taken by the federal government regarding spending further complicates and aggravates the economic recovery. We all want a recovery without experiencing the pain which a free market must inflict upon a correction, and though some economic pain has already been felt, more pain is likely unavoidable.

Eventually, interest rates will need to be increased in order to slow growth and to control inflation. Increased inflation will only slow the economy and will drag out this economic slog. I don’t anticipate a full recovery for a least another three to five years – hopefully I’m wrong. I’d be interested in hearing what others think.

Dr. Tufte said...

Evan: Clean up that link!

For my part, I saw signs of a thaw around here starting in late January.

But, I think this post is only tangentially related to Chapters 1-3. It's a good point that demand appears to be perking up in some markets.

Brooklyn said...

I think Dr. Tuft is correct in saying that some markets are perking up but others still have a ways to go. The industry I am in is saying third quarter of 2010 is the earliest signs of a recovery and that's being optimistic.

I'm sure everyone has an opinion on when things will turn around, we can only hope it's sooner than later.

Evan said...

Dr. Tufte:

I don't know what you mean by "clean up that link"? Can you not get it to open? I clicked on it several different times and it opened fine??

Amelia said...

I certainly have seen signs of recovery as of late in Southern Utah, if not the entire country. I work at an accounting firm in town preparing financial statements and there is proof of recovery day in an day out from that point of view.

Revenues and profits have increased for my clients quite noticeably. This is especially encouraging considering that financial information is a lagging indicator of the business cycle.

It is smart for companies to re-stock their inventories while they can get good prices on commodities. In this regard, they will be ready for business when the economy is "healed" (if you will...).

Another example is the housing industry in Southern Utah, Nevada, and California. My in-laws house has certainly appreciated since December and they live in California, one of the hardest hit places for housing prices.

Things have certainly turned around. Everyone expects it to be a huge, visible trend. I disagree with this notion. The economy has thousands of areas where improvement can occur. You just have to keep your eyes open and take relief in the small things. It's a business cycle, it will turn around. It always does.