A fresh debate over the state of the U.S. economy is gaining traction on social media, after Anthony Pompliano declared a “manufacturing boom” underway, while The Kobeissi Letter is fueling renewed concerns that underlying stagflation pressures may be building.
Manufacturing Momentum Picks Up
In an X post on Sunday, investor and commentator Pompliano pointed to what he described as a “manufacturing boom” underway in the United States.
Supporting the view, the latest data showed the U.S. manufacturing sector continued to expand in April, with the ISM Manufacturing PMI holding steady at 52.7, matching March’s reading and marking a fourth consecutive month of growth.
The New Orders Index rose to 54.1, while production and supplier deliveries remained in expansion territory. However, employment and inventories stayed in contraction, highlighting ongoing labor market softness despite broader economic momentum.
Stagflation Concerns Re-Emerge
The combination of steady output growth, surging input costs, and declining employment levels is raising concerns about stagflation, a scenario where inflation rises even as economic growth slows. The letter wrote, “Stagflation is intensifying across U.S. manufacturing.”
The ISM Prices Paid Index jumped 6.3 points to 84.6, marking its highest level since May 2022. Over the past three months, the index has surged by 25.6 points, the largest three-month increase on record.
Pointing to the supply chain, the letter wrote the surge is being driven by “surging steel and aluminum prices affecting the entire supply chain,” alongside “tariffs on imported goods.” The letter added that manufacturers are also dealing with “higher energy and materials costs driven by the Iran War.”
Aluminum prices soared to multi-year highs last month as the global metal market is currently experiencing a significant “black swan” event due to disruptions caused by the ongoing conflict in the Middle East, said Nick Snowdon, a top metal analyst.
The ISM employment index fell 2.3 points to 46.4 in April, signaling contraction for the 15th consecutive month and hitting its lowest level since January.
The recent GDP report highlights stagflation fears, as U.S. economic activity grew 2% annualized in the first quarter, while core PCE inflation rose to 3.2% in March. This inflation spike, attributed in part to higher gasoline prices linked to conflict involving Iran, reflects ongoing pressures impacting consumer spending and manufacturing costs.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.
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