Conversation

Preliminary thinking, speculation, and hypotheses. Earnestly intended and honestly attempted, but almost always needing further consideration, clarification, correction, or not-yet-found confirmation. These are research notes and homework still underway. Conversation is derived from the Latin meaning to turn together.

  • Consistent Spending Habits?
    Compared to March 2025, during the month of April US consumers earned a bit more, spent a bit more, saved more than in recent months, and spent less on a wide array of durable goods. Despite still robust demand (see first chart below) — and uncertainties related to supply — the year-over-year PCE price index […]
  • Deep Pockets
    According to the US Census Bureau (Department of Commerce), “Advance estimates of U.S. retail and food services sales for April 2025, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $724.1 billion, up 0.1 percent from the previous month, and up 5.2 percent from April 2024.” Bloomberg reported on […]
  • Demand Shock or Supply Shock?
    Wednesday morning on Bloomberg Surveillance (see video link below), Frances Donald, chief economist with the Royal Bank of Canada, highlighted the potential risk of “… dysfunctions in the supply chains that leads to more problematic developments this year.” She emphasized, “… when you start to mess with supply and demand dynamics within supply chains, when […]
  • US Demand Persists in March
    According to the Bureau of Economic Analysis, “Personal income increased $116.8 billion (0.5 percent at a monthly rate) in March… Disposable personal income (DPI)—personal income less personal current taxes—increased $102.0 billion (0.5 percent) and personal consumption expenditures (PCE) increased $134.5 billion (0.7 percent). Personal outlays—the sum of PCE, personal interest payments, and personal current transfer […]
  • Obvious but underestimated?
    I have been surprised by how others have been surprised by how supply chains are responding to tariff turmoil. In mid-December I included this almost throw-away-line in a note to selected clients: The most heavily tariffed imports will likely become rare, consumer prices on rarities will spike, and US exports will shrivel from retaliation. If […]
  • March retail trajectory
    Yesterday the US Census Bureau reported: Advance estimates of U.S. retail and food services sales for March 2025, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $734.9 billion, up 1.4 percent (±0.5 percent) from the previous month, and up 4.6 percent (±0.5 percent) from March 2024. Total sales […]
  • Full value or fickle tariffs
    The following was contributed by a reader who has asked to remain anonymous. Many thanks — and apologies — to William Shakespeare. Let me not to the supply of demandAdmit impediments; trade is not tradeWhich alters as politics commands,Or bends with the remover to remove.O no, it is a value-fixèd markThat looks on tempests and […]
  • Resilience: Cause or Effect?
    Shallow men believe in luck or in circumstance. Strong men believe in cause and effect. (Ralph Waldo Emerson, The Conduct of Life, 1860) Gravity’s effect is variable, but its influence (as far as I know) is unavoidable. Friction has both beneficial and problematic effects depending on context or purpose. Supply chains constantly manage gravity and […]
  • Most pernicious tariffs
    Below is an interview from this morning’s Bloomberg Surveillance. Henrietta Treyz of Veda Partners says that the sector-specific tariffs (previously discussed here) are the “most pernicious”: causing the most harm in a surprising way. Derived from the Latin per-nicies meaning by- or through-death. She expects the current automotive, steel, and aluminum tariffs to be joined […]
  • Warwick: Hurry up and Wait
    Below is a helpful Bloomberg interview (under 8 minutes). David Warwick outlines fundamental tariff-related issues facing supply chain decision-makers. While the Tech supply chain is front-and-center, very similar issues face most other sectors. Warwick is wonderful at concisely capturing the challenge now complicating supply chains. I am less impressed by his hope that common sense […]
  • Uncertainty versus Perfidy
    Many have complained of uncertain tariff policies (here and here and here). Houthi attacks on Red Sea shipping are uncertain. This October’s water levels on the Mississippi, Rhine, and Yangtze rivers are uncertain. June energy prices are uncertain. Commerce persists and constantly adapts to such uncertainty. Uncertain derived of Latin certus: not fixed, not resolved, […]
  • Trying to pierce the fog of war
    This morning the new ten percent universal — or baseline — tariff will be levied on imports into the United States. Other tariffs are already in place (here and here and here), more tariffs are promised. As headlined in the Financial Times, “US stocks shed $5.4tn in two days as Trump’s tariffs stoke recession fears.” […]
  • “April is the cruelest month”
    During February American consumers expended about the same as they did in January (which was slightly less than a high-spending December, see first inflation-adjusted chart below). Last month Americans made a little more, saved a little more, and may have stayed home more (bad weather? ). On Friday Bloomberg’s PCE report (and others) emphasized: Notably […]
  • Tariffs and TARA
    Below is a conversation from this morning’s Bloomberg Surveillance. Ryan Petersen with Flexport discusses tariffs. He offers most of the same predispositions, assessments, arguments, and preferences as most of my supply chain-focused clients and contacts. Most support “bringing back” manufacturing to the United States. Many are open to carefully crafted reciprocal tariffs (here and here […]
  • Characteristics of pre-tariff demand
    January consumption expenditures ticked-down just a tad (see first chart below). Given unusually cold weather and perhaps some post-holiday restraint, this is not unprecedented nor necessarily the start of a pattern. January 2024 expenditures ($15,812.6 billion 2017 dollars) were lower than December 2023, but by last month US personal consumption expenditures had grown to $16,283.6 […]
  • Tariffs (again)
    From Sunday night to Monday noon (US Eastern Time) my inbox overflowed with questions and venting — probably more venting than questions. By Monday dinner-time the drama had significantly abated (here and here and here). Back on December 2, I wrote in regard to Mr. Trump’s tariff strategies, “What is promised — threatened — often […]
  • Closing status of 2024 US Flows
    According to the Bureau of Economic Analysis, December demand — measured by Personal Consumption Expenditures — increased 0.7 percent compared to November. This was almost twice the rate of increased personal income (0.4 percent) continuing a steady — supply-chain-friendly– ascent in real (inflation-adjusted) consumption that started in mid-2021. See first chart below. In response to […]
  • Resilience realities
    Nicholas Morales at the Richmond Federal Reserve Bank has authored a helpful Economic Brief that concludes: The push for resilient supply chains reflects a trade-off between stability and cost. While resilience investments protect against future disruptions, they may raise input prices and inflation in the short term. Given the likelihood of increased climate events and […]
  • Neck strain and hourglass structures
    Tomorrow, Tuesday, January 7, face-to-face negotiations resume between the International Longshoremen’s Association (ILA) and the US Maritime Alliance (USMX). Dockworkers and port operators are facing a January 15 (extended) contract expiration deadline. According to Bloomberg, the crux of the stand-off involves “the use of semi-automated, rail-mounted gantry cranes at port terminals… Such equipment is permitted […]
  • Out of gas in Veľké Kapušany
    On January 1 pipeline flows of Russian natural gas across Ukraine to Veľké Kapušany, Slovakia (and elsewhere) came to an end (see map below, principal flows have moved between Sudzha, Russia (yellow NE) and Veľké Kapušany (yellow SW) ). In February it will be three years since the Russians invaded Ukraine. Despite the war, a […]
  • End of year look-ahead
    Forecasting earthquakes, volcanic eruptions, cyclones, flood, fire, famine, epidemics, cyberattacks, and war is easy. Shifting demand patterns and supply disruptions are de rigueur. Predicting when and where is the tough — typically impossible — task. Resilient choices are often neglected because we discount directly experiencing where and when. Answering why these threats — and our […]
  • 2024 Quick Review
    Amazonia has not recovered from two years of drought. The Sahara desert is expanding (here and here). Despite recent rain, parts of Pakistan are stubbornly dry. One third of the United States is currently experiencing drought. Over the last twelve months flooding in southern Brazil, Spain, Bangladesh, and the Western Carolinas was especially intense. Even […]
  • Feels-like price temperatures moderate
    According to the Bureau of Economic Analysis, “Personal income increased $71.1 billion (0.3 percent at a monthly rate) in November. Disposable personal income (DPI)—personal income less personal current taxes—increased $61.1 billion (0.3 percent). Personal outlays—the sum of personal consumption expenditures (PCE), personal interest payments, and personal current transfer payments—increased $78.2 billion (0.4 percent) and consumer […]
  • Food-At-Home seeks equilibria
    The November Consumer Price Index for Food-At-Home displays some of the volatility that encourages some economists to exclude food (and fuel) from measures of so-called “core inflation”. The Bureau of Labor Statistics reports, “The food at home index rose 0.5 percent over the month. Four of the six major grocery store food group indexes increased […]

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