Last week I conducted our semi-annual interview with our friend and noted economist, Gary Shilling. Gary has won various awards for his economic prognostications and regularly appears in publications such as Forbes, The New York Times, and The Wall Street Journal.
We've hosted these interviews with Gary for the past 11 years. One of the reasons they remain popular is because of his ability to explain what’s going on with the economy in layman’s terms. As usual, we asked for his thoughts on how the economy is affecting consumers and companies, as well as considerations for what to expect ahead in 2023 based on economic conditions.
Here’s what we learned from last week’s interview.
First, according to Gary, under Jerome Powell's leadership as the Chair of the Federal Reserve, the Fed has made it very clear that battling inflation is a top priority. Since they will not be giving up that battle, we can expect to see further increases in interest rates. Fortunately, he predicts that the increases will be lower than the last couple of increases because of other factors he addressed in the interview.
Second, the principal factor that will constrain rate increases is the fact that as companies release their quarterly earnings reports throughout the year, Gary believes that the evidence will support the fact that the economy is cooling off. That said, he believes that while things will cool off there will still be inflationary pressure as things like the cost of energy and labor continue to affect companies.
One of my favorite parts of each interview has been his response to the question, "If you were sitting on a company Board, what advice would you have for the CEO and the leaders of the company?" Without missing a beat, his advice would be: Be more conservative, preserve cash and protect your working capital. That's almost always going to be good advice; it may be even better advice if the economy is officially declared to be in a "recession." And on that front, he noted that if more companies announce layoffs and defer, or slow down their CapEx plans, that will hasten the recession.
One other topic that we asked Gary to address is what’s happening around the world. Gary had some interesting insights about how situations like the war in Ukraine, events in China, or the potential issues between Taiwan and China could impact the global economy.
I encourage you to listen to the interview to hear more about these topics in depth. And if you're interested in getting a free sample copy of Gary's fantastic monthly newsletter Insights, send us an email. Gary has graciously agreed to send you a free copy of the most recent issue. I've been subscribing for 12 years and find it to be one of the best economic newsletters in the business.
If you’re interested in other resources on the economy or supply chain, get in touch.
And before we leave, make sure you join us for the Webinar “What the Board Wants to Know About Your Supply Chain”.
On March 9th at 11am Central TranzAct will be hosting this new webinar with our friends from CSCMP’s Transportation Center of Excellence and the National Industrial Transportation League (NITL).
We will be addressing what you need to know when the Board of Directors or your C-Level executives ask you to share how your company is handling logistics and supply chain challenges.
Register for the webinar to learn from other shippers with decades of experience.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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