Goods, Imports, Transports, and The Margin Squeeze: A Persistent Negative Signal

An Economic Commentary by Patrick T. Bulger | The Distilled Perspective

Our data continues to indicate a challenging economic environment 
in the production and transport sectors. 

Our internal analysis points to a persistent and concerning divergence 
between supply chain issues and elevated costs.

A broad-based look at the goods sector 
shows that availability within the maker supply chain is still unsettled. 

Our data points to a weakness in demand is further confirmed by transport volumes, 
which remain low, even as costs to transport remain elevated.

Adding to this complex picture, wages are still historically elevated, 
even though they have come down from the "Bazooka Bubble" of 2021. 

Businesses continue to report high input, material, and benefit costs.

As we have been highlighting for some time, this persistent margin squeeze, 
appears to be spilling into weaker job-related numbers. 
The core issue appears to be a negative feedback loop where 
business demand and volumes are not making up for cost pressures.

Despite some popular narratives, the dollar has not weakened to an extreme low; 
it has simply settled at the lower end of its recent range 
while remaining generally elevated in the 25-year picture. 

Similarly, last week's move in the 2-year Treasury has not reversed, 
which we continue to watch closely 
as a sign of sustained demand for safe assets.

This is just one of many data sets that we follow closely in our investment advisory. 

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