The economy is in a typical period of mild cyclical ups and downs between recessions, not true business cycle highs and lows. We are almost at the next mini-high, which means that data should be starting to grow at a slower rate to bring yr/yr growth down in the second half of this year. The next low is expected to occur at the end of 2016, and while the growth for the overall economy is not expected to become negative at that time, the growth rate will have slowed. February data, including industrial production and retail sales, is showing some signs of this weaker growth.
The June 2014 Forecast Letter pointed out a sharp rises in several commodities. Less than a year later some products have seen plunging prices, all for different reasons. Gasoline and petroleum prices have seen a sharp drop due to a combination of expanded production and lower consumption. China, the world’s largest steel producer, increased its steel exports by 51% in 2014 compared to 2013, causing the market to fall. Chinese steel exports have continued to increase in 2015. Hog prices spiked in mid-2014 due to an epidemic that wiped out eight million piglets; prices have now returned to normal as the disease had decreased and uncertainly about supplies lessened.
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