“Please Sir, Can I Have Some More”: Be Careful What You Wish for With the US Economy!

Companies Mentioned: Methanex, bp, Venture Global, Coterra, ADNOC, The ACC, Petronas, Deere, Siemens Energy, Orsted, Vestas, Bloom Energy, Plug Power, ITM, Danimer Scientific, Gevo, LONGi, Hygreen Energy, Dragoman, Shell, BMW, VW, Mercedes
Commodities Mentioned: Oil, Natural Gas, Ethane, Ethylene, Polyethylene, LNG, Hydrogen, NGLs, Propylene, Ammonia, Methanol, Naphtha, Corn, Soy, EVs, Electrolyzers, Solar Modules, Wind Turbines

While the US election focus is trying to move away from name-calling and towards the economy, US voters who believe the economy is in bad shape may need to do some homework – suggested policies look troubling.
US inflation is below its 110-year average, and the economy is growing, creating net employment gains. The US compares well with many other world regions, helped not hurt by the high oil price environment.
As important, the Fed has as much interest rate economic stimulus power as it did before the financial crisis. The Fed is holding back in part because we cannot satisfy the US consumer spending thirst without inflation.
The added challenge is that stimulating the economy will likely mean increased imports from China at a time when we want to raise tariffs – this could drive a more severe spike in inflation than we saw in 2022.
Otherwise, we look at hydrocarbon advantages in the US and opportunities to export more, without trade barriers, we look at falling farm incomes, how to find hydrogen partners, and why transition needs China.

Exhibit 1: Contrary to many political messages, inflation in the US is not high and below the very long-term average.