Analyzing Economic Indicators

Reflecting on a busy and eventful 2024, I wanted to share my key takeaways from this year’s engagements and speeches. 𝟭. 𝗠𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗚𝗹𝗼𝗯𝗮𝗹 𝗣𝘂𝗯𝗹𝗶𝗰 𝗗𝗲𝗯𝘁 𝗟𝗲𝘃𝗲𝗹𝘀 Global public debt has grown sizably over the last few years and is projected to approach 100% of GDP by the end of this decade. We need a strategic pivot in global fiscal policy – ensuring that governments will have the resources needed to invest in structural transformations, including climate change, and to fight the next crisis. Countries need a strategy that focuses on growth, that has effective guardrails to ensure compliance, and that builds in close engagement with all stakeholders including civil society to have the greatest chance at success. More here: https://lnkd.in/gw3uswMS   𝟮. 𝗡𝗮𝘃𝗶𝗴𝗮𝘁𝗶𝗻𝗴 𝗙𝗿𝗮𝗴𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻, 𝗖𝗼𝗻𝗳𝗹𝗶𝗰𝘁, 𝗮𝗻𝗱 𝗟𝗮𝗿𝗴𝗲 𝗦𝗵𝗼𝗰𝗸𝘀 Russia’s invasion of Ukraine has had a profound impact. This conflict not only affected Ukraine and its neighbors but also reshaped the global economy. Increased fragmentation and higher defense spending are now realities we must navigate. Central banks need to adapt their strategies, and coordinated fiscal, financial, and structural policies are crucial to maintain macroeconomic stability in this more shock-prone environment. More here: https://lnkd.in/gm4yUHhq 𝟯. 𝗚𝗲𝗼𝗽𝗼𝗹𝗶𝘁𝗶𝗰𝘀 𝗮𝗻𝗱 𝗶𝘁𝘀 𝗜𝗺𝗽𝗮𝗰𝘁 𝗼𝗻 𝗚𝗹𝗼𝗯𝗮𝗹 𝗧𝗿𝗮𝗱𝗲 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗗𝗼𝗹𝗹𝗮𝗿 The pandemic and geopolitical tensions have led countries to reassess their trading partners and economic strategies. There's a noticeable shift in foreign direct investment flows along geopolitical lines. These changes underscore the dynamic nature of global trade and the need for adaptable economic policies. More here: https://lnkd.in/g9cbVUjQ 𝟰. 𝗖𝗿𝗶𝘀𝗶𝘀 𝗔𝗺𝗽𝗹𝗶𝗳𝗶𝗲𝗿? 𝗛𝗼𝘄 𝘁𝗼 𝗣𝗿𝗲𝘃𝗲𝗻𝘁 𝗔𝗜 𝗳𝗿𝗼𝗺 𝗪𝗼𝗿𝘀𝗲𝗻𝗶𝗻𝗴 𝘁𝗵𝗲 𝗡𝗲𝘅𝘁 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗗𝗼𝘄𝗻𝘁𝘂𝗿𝗻 While AI can drive efficiency, it can also pose risks, especially during economic downturns. In the next downturn, AI could threaten a wider range of jobs than in past cycles. AI systems, trained on past data, may struggle with novel events, potentially exacerbating financial instability. To mitigate these risks, we must ensure tax systems do not favor automation over people, support workers affected by AI, and adopt measures to reduce financial and supply-chain amplification risks. More here: https://lnkd.in/gnM-XZtC   As we move into 2025, these challenges will remain top of mind as we work to foster a more resilient global economy. Wishing you all a prosperous and impactful new year!

When uncertainty is elevated, considering scenarios is more useful than debating a modal outlook. Today, there are at least two possible paths for the economy. In one, the conflict in the Middle East resolves quickly, oil and energy prices fall, and the impact on the U.S. economy is short-lived and muted. Under those circumstances, it likely would make sense to look through the temporary rise in energy prices, assuming inflation expectations remain well anchored.   But if the conflict becomes more protracted, a different scenario is possible. Disruptions in energy supply and associated cost pressures could persist, with increased risks for higher inflation, slower growth, and a weaker labor market. This would amplify the current tradeoffs for monetary policy, making it harder to balance the risks to both sides of our dual mandate. With all of this uncertainty, what’s the outlook for monetary policy? There is no single most-likely path. With policy in a good place, we need to remain flexible, able to respond to rapidly evolving risks. Now, this may seem vague, even dissatisfying.   But offering too much forward guidance in an uncertain world risks conveying a false sense of certainty, reducing rather than improving transparency, and making it harder for the public to clearly predict how the FOMC will react. So, for now, recognizing the uncertainty, examining potential scenarios, and staying focused on restoring price stability and supporting full employment no matter how the economy evolves is optimal communication and appropriate policy.

You feel it in surveys first. Then you see it in earnings. 📉 Consumer sentiment has been sliding for months. Now it’s showing up in the numbers. PepsiCo just reported a revenue and profit decline, cutting its full-year forecast. Their CFO summed it up bluntly: “Relative to where we were three months ago, we probably aren’t feeling as good about the consumer now.” Translation: : ⚠️ The vibe is off. And it’s not just Pepsi: 🌯 Chipotle posted its first same-store sales drop since 2020. 🧺 Procter & Gamble says Americans are doing less laundry to save on detergent. ✈️ American Airlines and Delta Air Lines pulled full-year guidance, citing volatile travel demand. This isn’t a single company issue - it’s a sentiment shift at scale. From burritos to beverages, laundry loads to leisure travel - the pullback is emotionally driven. Not because wallets are empty, but because confidence is. And that brings me to one of my favorite niche fascinations: The weirdest recession indicators economists have tracked over the years. The ones that don’t show up in government data sets but do show up when your friend says “I’m just rewatching The Office again” and you understand something deeper is happening. 💄 The Lipstick Index: Coined by Estee Lauder's chairman during the early 2000s downturn. When times are tough, consumers skip big luxuries and go for small pick-me-ups, like a $12 lipstick instead of a $1200 handbag. Emotional arbitrage. 🩲 The Men’s Underwear Index: Alan Greenspan said it, not me. The theory goes that men delay underwear purchases when things are bad, because it's invisible and, let’s face it, not a priority. So if sales dip, watch out. 👗 The Hemline Index: A 1920s theory suggesting hemlines rise during economic booms and fall during downturns, supposedly because modesty (and practicality?) take over. 💅 The Mani-Pedi Barometer: Beauty services are often first on the chopping block when money gets tight. If your nail tech has open slots all week, it might be time to rebalance your portfolio. 📺 The Comfort Binge Effect: Streaming platforms like Netflix have noted spikes in rewatching comfort shows (Friends, The Office) during economic downturns. Less experimentation, more regression to the emotional mean. The economy doesn’t break all at once. It frays at the edges - in nail salons, snack aisles, and streaming queues. Anyway, I’m off to rewatch Friends instead of doing my laundry and make sure my hemlines are recession-appropriate.

Let’s talk about copper imports and some of the complexity right now in anticipating overall effects on users (both in terms of timing and magnitude of effects). Two charts below (one my own, one reproduced from Bloomberg, originally from https://lnkd.in/g__Rvwet). Thoughts: •The top chart shows metric tons of imported copper cathodes & sections of cathodes (HTS 7403.11.0000), which is by far the largest imported type of manufactured copper product (HTS 74), with 2024 imports totaling $8.47 billion dollars (out of $17.2 billion in imports for all of HTS 74, or about 49.4%). In 2024, the average month saw ~75,000 tons of imports. April and May 2025 (last two data points) saw imports of 201,434 and 218,133 tons, respectively (or 2.7x and 2.9x prior year average monthly imports). This frontloading means there is a large stockpile of copper already in the USA that won’t be hit with tariffs. •However, before spiking the inflation football and saying “well, then there will be no inflation”, you need to look at the second chart. This shows the percent premium for US copper futures (Comex) relative to the London Metal Exchange. Normally, that premium is quite low. However, it exploded in 2025, reaching over 20% since 7/8 (when the 50% copper tariffs were announced). For reference, LME copper trades around $10,000 a ton today. What this means is that US users of copper have been paying a 5-15% premium for copper relative to firms in other countries over the past few months, which has now increased to above 20% (and this is before tariffs take effect). •Why does that price premium matter? Simple: higher copper prices in the USA reduce the competitiveness of US exports that contain copper. Moreover, it’s important to remember that far more people are employed in industries that use copper versus the entire copper mining, smelting, refining, and product industrial complex. Simple example: electrical equipment and component manufacturers (NAICS 335) employ 400,000 workers (https://lnkd.in/gEXCTusE), with electrical products extensively using copper. In contrast, the USGS reports just 13,000 workers in the entire copper industrial complex in the USA (https://lnkd.in/gU-pftdr). Implication: Copper tariffs are another example where we are tariffing an upstream intermediate input used by far more workers than employed in the industry that makes the upstream intermediate input. Such trade policies are net job killers, and have even been termed self-harming trade policy (https://lnkd.in/gWgxQjtY). #economics #markets #shipsandshipping #supplychain #construction #supplychainmanagement #manufacturing 

In a recent study, we analyse 145,000 point estimates and confidence bounds on the effects of monetary policy shocks on output and inflation collected from more than 400 primary studies. We show that interest rate hikes by central banks are less effective in reducing inflation than conventional wisdom suggests. Correcting for publication bias, the output cost of reducing inflation increases. Our results suggest that we need realistic expectations about what monetary policy can achieve in steering inflation - and a broader mix of policy instruments, including fiscal, industrial, and competition policies, to ensure price stability at a reasonable macroeconomic cost. Policy brief in English: https://lnkd.in/dSJfrzu2 Policy brief in German: https://lnkd.in/dCATquGS Full study: https://lnkd.in/dBjXWVQ8

Five non obvious learnings from my decade in startup investing. Long-term success in early-stage venture capital is complex, shaped by market cycles, behavioral dynamics, and systemic inefficiencies. Here are my top 5 learnings from a decade of investing in startups. Let’s see how these age over the coming decade! 1. The Best Deals Often Look Mediocre at First Most breakout companies don’t look obvious at seed stage. The best founders are often contrarian and misunderstood. Many investors over-index on early traction, but true long-term winners usually show strong founder insight, adaptability, and a unique way of thinking—even if they lack polished decks or conventional signals of success. 2. Luck is a Skill (If You Know How to Create It) “Being lucky” in venture isn’t random - it’s an outcome of positioning, information asymmetry, and behavioral adaptability. The best investors actively manufacture luck by: - Expanding surface area (helping founders before investing, building deep networks, staying top-of-mind). - Recognizing second-order patterns (e.g., market shifts before they reflect in metrics). - Embracing serendipity (following curiosity, taking unexpected meetings). 3. Portfolio Math Lies – It’s About Anti-Portfolio Thinking Traditional portfolio theory suggests you need a few outliers to drive returns. But the key is actually avoiding the wrong misses. Many VCs focus on what they invest in, but what you don’t invest in matters just as much. - Missing a Flipkart, Swiggy, or PayTM due to pattern-matching bias is far more damaging than picking a mediocre deal. - The best investors revisit why they said ‘no’ to past unicorns and refine their filters constantly. 4. The Biggest Risk is “Too Much Conviction” The more experienced an investor becomes, the greater the risk of false confidence. Early-stage VC is probabilistic, but many long-term investors fall into the trap of overestimating their ability to predict outcomes. - Markets change. What worked in 2015 may not work in 2025. - The best investors build mechanisms for self-doubt—forcing themselves to challenge their assumptions regularly. 5. Reputation Compounds Like Capital – But in Unexpected Ways Most people assume VC reputation comes from returns or social status. In reality, the most enduring reputations come from trust, founder-first behavior, and non-obvious signals: - The way you handle bad outcomes matters more than your wins. - Long-term reputation isn’t just built with founders - it’s shaped by other investors, LPs, ex-employees, and even competitors. - The best VCs give more than they take, often in ways that don’t yield an immediate return but create long-term leverage.

Global Government Debt: A Closer Look at the Numbers The IMF's latest data (April 2025) paints a sobering picture of government debt across the globe. The Debt-to-GDP ratio, a key indicator of a country's fiscal sustainability, continues to vary widely—from alarming highs to notable restraint. Sudan has now surpassed Japan, becoming the country with the highest debt-to-GDP ratio at 252%, overtaking Japan’s 235%. This is a critical shift, highlighting intensifying fiscal stress in developing economies. 🇸🇬 Singapore (175%), 🇮🇹 Italy (137%), 🇺🇸 United States (123%), and 🇫🇷 France (116%) are also among the nations with debt levels exceeding 100% of GDP. On the other end, Germany stands out as the G7 nation with the lowest debt-to-GDP ratio, at 65%—demonstrating a relatively conservative fiscal stance amid global turbulence. Why it matters: High government debt can constrain future policy flexibility, crowd out investment, and heighten vulnerability to external shocks. Conversely, manageable debt levels can support economic resilience and investor confidence. In an era of rising interest rates and geopolitical uncertainty, debt sustainability will remain at the forefront of macroeconomic strategy and risk assessment.

Climate change could reduce average income per person by 40% 🌎 A new study finds that a 4°C increase in global temperatures could reduce average global income by 40%, significantly more than previous estimates. Even with warming limited to 2°C, the expected decline in global GDP per capita is 16%—far higher than the 1.4% projected by earlier models. The findings suggest that current economic projections have underestimated the scale of financial losses associated with climate change. The research, published in Environmental Research Letters, critiques the traditional economic models known as integrated assessment models (IAMs). These models have played a key role in informing climate policy but have not fully accounted for the effects of extreme weather events or the interconnected nature of global supply chains. As a result, they have understated the broader economic impacts of climate risks. The new analysis improves on existing models by integrating updated climate forecasts and including the effects of supply chain disruptions caused by extreme weather. This approach provides a more comprehensive view of how climate change can impact economic systems, moving beyond the assumption that impacts are only local or easily offset by increased output elsewhere. The study challenges the idea that some regions could economically benefit from warming. While some colder regions might see marginal gains, the overall effect is negative due to the global nature of trade and economic interdependence. Disruptions in one part of the world can have cascading effects across sectors and geographies, reducing resilience and increasing vulnerability across the system. The authors conclude that current modelling practices risk underestimating both the costs of inaction and the benefits of rapid emissions reductions. Updating economic models to better reflect extreme risks and system-wide impacts is essential for informed policymaking. The findings reinforce the urgency of integrating climate risk into economic planning and decision-making. Source: The Guardian #sustainability #sustainable #business #esg #climatechange #risks

When commodity prices slip, the entire agriculture chain takes the hit!! The article opens by emphasizing the inherently cyclical nature of global agriculture, wherein unpredictable factors like weather changes, geopolitical tensions, and international trade disputes have historically caused rapid price swings. It explains that the boom in commodity prices seen in 2022 was partly fueled by disruptions linked to COVID-19 and the Russia-Ukraine conflict, which rattled supply chains and drove up costs for fertilizers and transportation. By 2023 and continuing into 2024, however, the global market shifted, and the FAO Food Price Index recorded a notable downward trend for cereals, vegetable oils, dairy, meat, and sugar—resting significantly below its 2022 peak. This decline was driven by easing supply chain pressures, better harvests in some key regions, and a general cooling of economic growth worldwide. As prices slid, farmers experienced thinner profit margins, complicating decisions about whether to invest in new seeds, fertilizers, or technologies. The ripple effects extend beyond the farm gate: seed companies, fertilizer producers, and farm machinery manufacturers have all confronted weaker demand as growers curb spending. Meanwhile, ag-tech startups—which once attracted robust venture capital investments—now face a more cautious funding environment. Their prospective customers, already squeezed by low commodity prices, often delay or downsize technology adoption in an effort to protect short-term cash flow. Overall, the piece highlights how cyclical downturns in agricultural commodities do not merely affect farmers but reverberate through every layer of the value chain. With production costs still relatively high and climate change concerns looming, stakeholders across the sector must adapt, whether by diversifying crops, refining supply chains, or embracing innovative tools. Despite current headwinds, the article underlines that strategic long-term planning and collaboration can help create a more resilient agriculture sector for future cycles.

New economic shocks keep coming, landing on weaker fiscal grounds. The pandemic. The cost of living crisis. Trade disruptions. Historically high interest rates. And now, war in the Middle East. All layered onto public finances that never fully recovered. The newest Fiscal Monitor published today shows global government debt is set to reach 100% of GDP by 2029 – two years earlier than expected. Interest costs have jumped. A prolonged conflict in the Middle East would further raise debt risks. Governments must act now to preserve stability. When fiscal space is lacking, short-term fiscal support should be budget neutral and limited to protecting the most vulnerable. Read more of the report’s insights: https://lnkd.in/efQb7vbz.