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Barkin On Cooling Demand, Inventory Trends and Productivity

FED
  • We’re in the middle of a demand slowdown. It's partly after Covid over-stimulation, partly higher rates seeing demand moving better in balance with supply, and some marginal credit tightening. Demand isn’t cold but it is cooling although you would feel it a lot more in CRE or housing.
  • Inventories: a lot of businesses went through near death experiences in terms of access to inventory. I’m hearing a lot more thinking of inventories and all of the supply chain. Working against that is higher interest rates which costs more to protect supply chains, but by and large would expect higher inventories ahead.
  • Productivity: Has been quite low for the past couple years. We’re not in a world where can grow number of workers so productivity is critically important. The problem with the data is the q/q noise and Covid was a weird shock. I wouldn’t declare the productivity improvement as gone.
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