Page 6 - D18386 - LBMAO - Reporter - July-August 2022 - web optimized

Message from the PRESIDENT

is a recession looming?

david campbell ell things are almost back to normal! Just pandemic related slowdowns in manufacturing and
LBMAO President Wthink, in the spring of 2020 we were shut distribution.
down and only offering curbside pick-up. We Online sales boomed and entities such as
had to adjust our customer service plans to Amazon grew exponentially. Many of our retail
accommodate the protocols put in place by the members adapted to the realities of offering
federal and provincial governments to mitigate the online ordering and curbside pick-up, helping to
effects of the pandemic, COVID 19. increasing their sales and margins. Staff shortages
We weathered these challenges and our sector and inventory challenges were the norm. Now,
dynamically rebounded with strong sales and, inflation and the strong potential for a recession is
for the most part, robust profitability. Although looming. Yes, volatile times; however, not for the
we realized better outcomes than other sectors, first time, we have been through these conditions.
we did suffer from the stress of overworked Below are a couple of charts out of the U.S. that
employees and inevitable product shortages due to lean towards a recession, sooner rather than later:

"Since 1960...there
have been three
recessions where
inflation was the
predomoninant
cause and six
where it was not."

What’s different this time is this is going to be six where it was not. The chart below shows the
an “inflationary recession” versus a deflationary average of commodity index returns before and
recession. There is a distinct difference between after the start of these two types of recessions,
how commodities perform during inflationary and it’s clear that, despite check-backs in price
recessions vs. non-inflationary ones. Since 1960, along the way, the general trend for commodities
which is as far back as the Bloomberg Commodity is higher during inflationary recessions.
Index has data, there have been three recessions
where inflation was the predominant cause and Continued on page 16...

6 LBMAO Reporter - July-August 2022 www.lbmao.on.ca