Dairy Processing - January/February 2023 - 48

SUPPLY CHAIN
Going with the
flow
Despite inflationary pressures, there are reasons to stay optimistic.
by Kristen Putch | kputch@sosland.com
A
recession is very likely in the coming months,
according to Curtis Dubay, chief economist in the
Economic Policy Division at the US Chamber of
Commerce. Dubay spoke to attendees at International Dairy
Foods Association's (IDFA) Dairy Forum in Orlando on
Jan. 25 about what lies ahead for the US economy and how
businesses can prepare.
" We are likely to have a recession in the coming months, "
Dubay said. " But the US economy is resilient, even in the face
of terrible conditions, as it has shown ever since the financial
crisis in 2007. The nature of the economy is to grow and grow
strongly ... that hasn't changed. "
The annual inflation rate for the US is 6.5% for the 12
months ended December 2022, after rising 7.1% previously,
according to US Labor Department data published Jan. 12.
Dubay said the Federal Reserve will likely continue to keep
interest rates higher to tame inflation through 2024, noting
that a turnaround is not likely until 2025. Regardless, the Fed
won't lower interest rates until the inflation rate is about 2%,
he said.
Dubay also said that high food and gas prices put
Americans in a bad mood, but until recently people have been
48 JAN-FEB 2023 | DAIRYPROCESSING.COM
continuing to spend at a level above inflation because of a
buildup of $3 trillion in excess savings during the pandemic.
But now they are going through those savings and are starting
to increase their debt on credit cards, " though not at a
concerning level. "
During the COVID-19 pandemic, more than $803 billion
in stimulus payments were sent directly to Americans during
both the Trump and Bidem administrations. In total, nearly
$5 trillion went to households, businesses, local governments
and other institutions.
According to a recent study by the St. Louis Fed, the
government stimulus was responsible for some of the inflation
in the US. The authors found that 2.6% of the 7.9% 12-month
inflation rate in February 2022 was due to stimulus packages.
More than half of Americans reported using their stimulus
money to pay for basic necessities such as food and rent,
while recipients with higher incomes tended to save it.
Consumer spending soared in 2021 due to greater
disposable income. The authors found that stimulus payments
led to a much higher demand for goods going into 2022, but
industrial production at the time was unable to keep up. The
result was excess inflation.

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Dairy Processing - January/February 2023

Table of Contents for the Digital Edition of Dairy Processing - January/February 2023

Dairy Processing - January/February 2023 - Intro
Dairy Processing - January/February 2023 - 1
Dairy Processing - January/February 2023 - 2
Dairy Processing - January/February 2023 - 3
Dairy Processing - January/February 2023 - 4
Dairy Processing - January/February 2023 - 5
Dairy Processing - January/February 2023 - 6
Dairy Processing - January/February 2023 - 7
Dairy Processing - January/February 2023 - 8
Dairy Processing - January/February 2023 - 9
Dairy Processing - January/February 2023 - 10
Dairy Processing - January/February 2023 - 11
Dairy Processing - January/February 2023 - 12
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