Deutsche Bank’s Jim Reid writes in his chart of the day that, of the 20 US economic cycles since 1914, this is the strongest recovery in commodity prices on record at this stage.
It eclipses the two 1970s cycles largely due to the spikes back then occurring beyond year three of the 1970- and 1975- expansions (and also has a broader commodity composition beyond energy).
In other words, this is not your grandparents’ 1970s inflation shock: it is way worse (for now).
As Reid notes, while these things can turn on a dime “there is no evidence that commodity prices are mean reverting as policy makers hoped in 2022 and are likely to continue to show strong YoY gains for some time to come even if they flatline from here.”
Given the start seen in 2022, there is no simply solution to what has been a broad-based social shift toward environmental “virtue signaling” and commodity prices will continue to cause increasing headaches for policy makers, analysts say.