Economy

Steel Summit: Dr. Basu Says “You Can’t Handle the Truth!” of a Recession

Written by Laura Miller

August 22, 2023

To kick off the 2023 Steel Summit this week in Atlanta, Dr. Anirban Basu, chairman and CEO of the Baltimore-based Sage Policy Group, outlined major factors currently shaping economic outcomes in our country, providing the broader context in which steel prices are set.

In the way typical of a college professor (he teaches global strategy at Johns Hopkins University), Dr. Basu pointed out the issues so audience members could create their own forecasts. His Tom Cruise-themed presentation titled “Show Me the Money (Supply)” was an entertaining and enlightening way to start this year’s conference.

A major theme in the presentation, Dr. Basu reiterated that “the war on inflation continues.” Interest rates are running high with the potential to rise even further. “Can [the Fed] engineer a soft landing or is it Mission Impossible?” he quipped.

That war has not yet been won because of a red-hot labor market with record levels of employment, Dr. Basu said. And although the US economy is hot with significant momentum, there’s still an inflationary environment.

Some other highlights from Dr. Basu’s presentation?

  • You Had Me at Recession – Defining a recession is hard with Eyes Wide Shut. Although we’re not in a recession now, many “measures suggest quite strongly that a recession is quite likely.”
  • The Firm – firms emphasizing cost cutting, announcing layoffs.
  • A Few Good Properties – high mortgage rates, low interest in home buying, weakness in multi-family residential construction.

Dr. Basu predicted a recession is coming in the next 12 months. “It’s going to get worse before it gets better. … Maybe you disagree because ‘You can’t handle the truth!’” he said.

In a question and answer session, Dr. Basu agreed with many in the audience that the Inflation Reduction Act is not really having a significant impact on inflation. “It’s largely an alternative energy act,” he commented.

The 2023 SMU Steel Summit continues through Wednesday afternoon. Tuesday morning will feature a presentation “From Washington to Your Workplace” by author and columnist Gene Marks. The conference ends Wednesday afternoon after a “Prepare for 2024” talk from economist Dr. Alan Beaulieu.

Laura Miller

Laura Miller is a reporter and editor for Steel Market Update. Since 2007, she has held various editorial and marketing positions with steel industry publications, associations, and mills. In 2021, after a five-year hiatus working across other industries, she returned to steel trade journalism, joining SMU in 2022. She is a member of the Association of Women in the Metal Industries and a past-president of the AWMI Pittsburgh Chapter. She holds a BA in Latin American Studies from Edinboro University of Pennsylvania. She can be reached at laura@steelmarketupdate.com or 724-759-7869.

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