Supply Chain Economy: Consumer Sentiment Hits New Lows Despite Growth

The global economy is expanding, but consumer sentiment is plummeting to levels not seen since the Global Financial Crisis. This surprising disconnect has been analyzed by experts like Dr. Jason Miller, who highlights a variety of factors shaping supply chains and market dynamics, including increased capital expenditure in AI, rising interest rates, local NIMBYism (not in my backyard), and advancements in GLP-1 drugs. While overall freight volumes are about 1.5% higher than last year's levels, growth is narrowly concentrated in sectors like machinery, fabricated metals, and steel, which are closely tied to data center construction booms. Dr. Miller draws a parallel with the hydraulic fracturing boom that peaked in 2014 and led to an industrial recession two years later. He cautions that while the next six to nine months of data center construction are already 'baked in,' uncertainties such as local opposition, company finances for AI, and rising interest rates could slow down future projects. Oracle's declaration of force majeure on a New Mexico project with Blue Owl Capital is cited as an early warning sign. Dr. Miller also points out that companies like OpenAI and Anthropic face mandatory compute payments next year, which their revenues may not cover. His concern is that if there’s any significant slowdown in the data center ecosystem while the single-family housing market remains weak, it could have significant economic repercussions, particularly for supply chain professionals in 2024 and beyond. Source: FreightWaves