Global Changes Tighten Commodity Markets

Supply conditions will tighten noticeably for businesses through 2005 and possibly early 2006—but they won't be as tight as the frantic markets of mid-2000.

Because worldwide economic growth is happening faster than it did during the last expansion in the latter 1990s, price hikes and delivery delays will be larger than would normally occur with the expected pace of U.S. economic growth. Many large, developing countries, including China, India, and Russia, are now much more linked to the world economy. Their rapid growth adds extra pressure to available commodity supplies.

Still, printers will be largely insulated from the shortages in equipment and skilled labor that other industries will face, since a large amount of printing equipment and labor idled in the last few years.

The U.S. inflation trend jumped from about 1% to 3% in the first half of 2004 as commodity prices soared, some by as much as 100%. This reflects the abruptness of higher economic growth in the U.S. and Japan, along with a frantic effort by China to hoard commodity supplies. Already, most commodity prices are retreating, and others will decline soon.