Rising energy prices should have an impact on global GDP growth in 2021, though the ratio has been declining. Over the past 20 years, expenditures on energy and global GDP have an R2 of 0.873, but the share of energy to GDP has been declining. Splitting the two attributes on separate axis in the graph below enables a display but distorts this relationship. Due to the pandemic, energy costs fell by over 19 percent last year and GDP slipped from its long-run annual growth rate of 4.82 percent to just 1.6 percent. In 2021, global GDP growth will advance by 7.46 percent, but energy costs will rise by 25 percent. Higher energy costs will reduce potential GDP but represents just 7.8 percent of GDP. Instead, there will be substitutions as h...
What You Need to Know Today: The hot, dry weather forecast continues to drive strength in grain futures with corn and soybeans hitting another day of strong gains. Monday’s Crop Progress and Conditions data were in line with market expectations and showed relatively few concerns for the...
Yesterday we wrote about the Q1 GDP numbers and the June employment reports in an article entitled Real GDP for Q1 Relying on AI Buildout, Held Back by Consumer Spending. That article mentioned that consumer spending had become a drag on GDP. Nonetheless, real GDP in Q1 was revised upward to 2...
From WPI Consulting
Weighing in on strategic realignment
WPI’s team was retained by the governing board of a U.S. industry organization to review a decision, reached by vote, to invest significant assets into the development and management of an export trading company. WPI’s team conducted a formal review of this decision and concluded that the current level of market saturation would limit the benefits of the investment. Based on WPI’s analysis and recommended actions, the board subsequently reversed its decision and undertook a strategic planning effort to identify more impactful investments. On behalf of numerous clients, WPI has not only assisted in identifying strategic paths but also advised their implementation.