November 9, 2026

The below transcript is a translation of the podcast audio that has been machine generated by Adobe Podcast.

Derek Stanely What we would expect, though, is a softening macroeconomic environment next year in the manufacturing space for overall US industrial production that will have some sort of downward effect on the rate of change for oil prices and also for that 3 month moving average.

Taylor St. Germain Hi, everyone. This is Taylor St. Germain with ITR Economics. Thanks so much for joining me on this episode of TrendsTalk, where we’re your apolitical and unbiased source of economic intelligence here at ITR. And I’m really happy to have Derek back on with us today as we unpack some current events. Folks, especially as we approach midterm time, I know there’s a lot going on in our minds around uncertainty around geopolitical events, trade. And I wanted to highlight today with Derek, some of the data sets we watch on a weekly basis, as many of you know, a lot of the data that we get comes either monthly or quarterly. That’s pretty standard when you’re looking at macroeconomic data from the Census Bureau, from the Federal Reserve. But we have a number of data sets we’re looking at on a higher frequency than that just because there is so much going on in the economy. So, I’m going to kick things off with a our weekly economic index, just to highlight where we are relative to some previous years. I’m going to kick things over to Derek to have him discuss how we’re watching the event between the US and Iran with some actual data points to unpack that, and we’ll bring it together by talking through this idea that’s still front of mind for us, which is, yes, there’s growth, but that growth is coming at a higher cost, leading to profitless prosperity. So, no major changes in its forecast as of late. But we wanted to unpack some of these current events.

Taylor St. Germain One chart that our awesome data team at ITR is updating every week comes from the Federal Reserve Board in New York, and it’s a weekly economic index. Again, as many of you know, GDP data comes out quarterly, but we as economists want to be more informed in the moment of time that we’re in. And so that weekly economic index from the Fed can be very helpful. And if we look at where that weekly economic index has been as of late. We’re sitting here at about 2.98% with the latest reading that we received at the time of this recording, and that is actually higher than that same week, just one year ago, just one year ago. That same metric was at about 2%. So, we are almost a full percentage point higher on the weekly economic index. And again, this is measuring all macroeconomic activity. Again, the Fed really puts this together to have a weekly read on the economy. So, the economy continues to perform well. And again, that’s not to say there aren’t challenges out there, but just by looking at the health of the overall economy, which again, is absolutely being fueled by some of those higher markets, higher tech markets, data centers, AI, we’re still sitting at about 3% on a weekly basis. So, we’re not forecasting a recession. The Fed’s weekly data doesn’t suggest that we should be, you know, in recession territory here as well. We have growth, just growth slowing as we move into next year. Now, like I said, that doesn’t mean there’s not challenges that we’re dealing with. And one of those challenges is the uncertainty surrounding the situation between the US and Iran and the Strait of Hormuz. So, Derek, why don’t you let folks know what we’re looking at on that end?

Derek Stanley Yeah. So, what we’re looking at essentially is the evaporation of the cease fire that we had put in place earlier this year. So, I think it was around mid to late August, excuse me, June, the US and Iran tentatively reached an agreement where we were going to start seeing some improvements. And we at ITR look at the volume metric of traffic going through the Strait, it dropped off a cliff once the conflict broke out back in February, March. We saw some initial improvement though, right after that memorandum, of understanding as a technical word for it, was put in place. But as we know, that didn’t last very long. And right after that we saw traffic go back to near zero. So, wind the clock back to February, March of this year when we put our new oil prices outlook in place in response to what was happening, we lifted the outlook and we expected prices to spike on a rate of change basis going into the middle of this year, and then that gradually softened. But since the ceasefire didn’t hold, that added renewed uncertainty and put more upward pressure on oil prices. As a result, what we’re expecting is oil prices on a 3 month moving average basis to hover in the $90 per barrel range for the remainder of this year. Once we go into next year, macroeconomic forces do have a say in all this. So, while we have this ongoing conflict and, you know, we aren’t really sure when that’s going to end. We know the midterms are tomorrow, you know, we’re apolitical, but we have to address the elephant in the room, there’s a lot that could happen after that. What we would expect though is a softening macroeconomic environment next year in the manufacturing space for overall US industrial production that will have some sort of downward effect on the rate of change for oil prices and also for that 3 month moving average. So that’s when we expect it to go back into the 80s per barrel, some softening there. But you know, Taylor, as we’ve been taught over the last, I don’t know, eight months or so now, we know that the situation could change at any moment. So, we know there’s always diplomatic things going on behind the scenes to try to put this behind us, but that remains to be seen how that will turn out. As far as diesel prices, those are still at record high levels right now. So, what we’re talking to clients about more and more, especially as we go into budget season, is profitless prosperity. So, we know that energy prices are going to be a big part of the mix for next year. We know that electricity prices, if you’re operating plants in the US, that’s continuing to be a pain point just because of the growth of data centers and the drain that’s having on the grid, labor costs are still going to be a pain point commodity price escalators. So, there’s a lot of things competing for our bottom line, but as you said, the top line still looks good. We’re still seeing growth in the weekly index. We don’t expect a contraction in the industrial sector next year, it’s going to be more of a plateau. GDP is going to go through the same motion, but then we expect some growth in ‘28. So, the companies who are disciplined on margins, who are disciplined on putting measured price increases through, are the ones who are going to keep their bottom line healthy along with that top line organic growth that we’re projecting out there.

Taylor St. Germain Yeah. And again, folks, that’s still our message. It’s growth, but it’s growth at a higher cost. So, we need to think about those competitive advantages to be able to raise price. We need to think about ways to become more productive and efficient. We could see some slowing in a lot of these pricing metrics that Derek mentioned. But we’re not saying negative. We’re saying slowing. And we covered that on a previous TrendsTalk here. You know, just add to the current event. So, like Derek said, there’s essentially no volume going through the Strait of Hormuz since the cease fire has become irrelevant in the past few months. And it is creating higher diesel and higher oil prices. Now, there can be a little bit of a silver lining in that, I don’t want to throw our oil producers to the side here. We are starting to see the rig count on a weekly basis picking up, so there can be some positives that come out of these situations. But I think we’re all really feeling the pain as consumers from an inflation standpoint, and we have to watch that closely as economists. You know, another metric that we’re watching closely that that we haven’t mentioned yet is the World Drury Container Index. It’s really measuring the cost in US dollars of 40-foot containers. And that is up to, with the most recent data, about $4,429 per container. That is well below the pandemic level of, you know, $10,300 a container. So, we’re nowhere in that territory, but that is up relative to where we were before the conflict. If you look at the data before the conflict between the US and Iran, we were at about $1,898 per container, again comparing to the $4,429 that we see today. So, these pricing pressures are continuing to come from a number of different directions. The supply chains absolutely feeling it, as represented by that container cost. So, we also want you thinking about the supply chains. I don’t want you to assume the lead times that you see today are going to be the lead times you see six months from now, especially as we start to see our supply chain pressure index heating up.

Taylor St. Germain So, all in all, the economy is still growing at a healthy clip here in the US. Revenues, sales likely continued to perform well. But the cost pressure, the supply chain disruptions, the margin challenges are going to still be relevant as we move into early next year. And so, as Derek said, we need to make sure we’re planning for that to continue and having some contingency plans in place. We’ll continue to keep you updated on these current events. We write blogs about these all the time, so please head over to ITReconomics.com and check out some of the blogs that our team put together. And Derek and I will certainly be back to share after the midterms how the situation between the US and Iran will continue to evolve. But for now, I hope you all have a great rest of the week, and Derek and I will look forward to seeing you on the next one. Please like and subscribe to TrendsTalk wherever you listen to your podcast and we’ll be talking to you soon. Thanks so much. Take care for now.