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Food, Fuel, and the Cost-of-Living Crisis

Goldman SachsJeff Currie, Gary Shilling, Meghan O'Sullivan, Chris Barrett, Alison Nathan
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  • Structural underinvestment in the "old economy" and unresolved supply constraints are expected to drive a commodity supercycle similar to the 1970s and 2000s, potentially lasting 10 to 12 years, whereas some analysts argue price peaks may be behind due to inflation-adjusted corrections and temporary shortages.
  • A major capital expenditure boom is predicted to eventually de-bottleneck supply, but the investment cycle has yet to take root because investors require a three-year track record to overcome historical poor returns, a delay exacerbated by ESG policies and windfall profit taxes.
  • While a global recession may cause temporary price corrections and demand destruction for metals, food and fuel demand are expected to remain inelastic, with nominal GDP and commodity prices projected to continue growing even during contractions.
  • Oil prices are projected to potentially fall to $60–$80 per barrel as emerging economies with deficits reduce reserves, though American frackers shifting to profit prioritization may prevent a free fall, while copper futures could drop to $2.50 if manufacturing demand declines.
  • Global food prices, already 20% higher than a year ago, are driven by supply chain disruptions, climate change, and a shift from institutional to retail sales rather than absolute shortages, creating a cost-of-living crisis for populations spending 30–70% of income on food.
  • Significant investment is required within the next two to eight years in waste recovery, controlled environment agriculture, and alternative proteins to meet demand driven by population growth and rising incomes, or else severe humanitarian consequences will arise by the 2030s.
  • Failure to address food insecurity is expected to cause political instability, civil unrest, and mass migration potentially exceeding 100 million people, fueling anti-immigrant movements in Europe and the United States.
  • Geopolitical dynamics are shifting as Gulf producers become more critical in a smaller oil market, while Russia-China energy relations are projected to deepen into a strategic partnership over the next decade as Asian nations substitute for Russian piped oil to Europe.
  • The energy transition is anticipated to be highly disruptive, remaking the global energy system in a few decades, while a strong dollar is expected to severely impact countries purchasing commodities in USD with weakening local currencies.