Welcome to The Chemical Show, the podcast where Chemical means business.
I'm your host, Victoria Meyer, bringing you stories and insights
from leaders driving innovation and growth across the chemical industry.
Each week we explore key trends, real world challenges, and the
strategies that make an impact.
Let's get started.
victoria_1_07-28-2025_130941: Welcome back to The Chemical Show
where Leaders Talk Business today.
I am spotlighting a pair of speakers who are going to be
at The Chemical Summit in 2025.
if you like what you hear, you are definitely going to want to join the
conversation in person to be part of.
All the conversations.
The Chemical Summit this year is on September 30th and
October 1st in Houston, Texas.
Visit The Chemical Summit.com
for more information.
So onto our guests.
I have the honor of speaking with Jeremy Bess and Patrick Luce Who are both chief
economists at Stantec, so we may have to talk about how you can both be the
Chiefs, but that'll be a different story.
Jeremy and Patrick are coming to The Chemical Summit this year to
talk about economics and how all the trends that we're seeing are
affecting the chemical industry.
Today
we're gonna get a little bit of an insight into that, right?
We're sitting here midyear 2025.
Leaders all across every industry are looking ahead to figure out what's
gonna happen, putting together their business plans and their budgets
and their forward thinking for 2026.
And yet we're still wondering how 2025 is gonna play out.
So that's always an interesting debate and we're gonna talk
about that and more today.
Patrick and Jeremy, welcome to The Chemical Show.
jeremy-bess_1_07-28-2025_140941: Thank you.
Thanks for having us.
victoria_1_07-28-2025_130941: Yeah, super excited to have you here.
Super excited to have you guys back at The Chemical Summit this year.
At least it's back for Jeremy.
So Patrick will be a new addition to this, which is, gonna be great for me and for
all of our attendees and people there.
So glad to have you guys part of this.
jeremy-bess_1_07-28-2025_140941: Thank you.
victoria_1_07-28-2025_130941: just start.
With origin stories.
Patrick, let's start with you.
How did you get interested in this wonderful world of economics, and that,
brought you to where you are today?
patrick_1_07-28-2025_140941: Well, honestly, so my family is grounded in
the trades, so my grandfather did floor covering, my dad does floor covering, his
brothers, my uncles, do floor covering and a few cousins doing floor covering,
and they tell me my hands are too soft.
So I had to find a different field.
And so I went to college and ended up falling in love with economics
and patterns and trends because of what relationship that has on the
trades industry and construction and manufacturing, all those things.
So love a good puzzle and I think the economics is the puzzle for my soft hands.
victoria_1_07-28-2025_130941: That's awesome.
That's really cool.
Jeremy, how about you?
jeremy-bess_1_07-28-2025_140941: I got into economics actually in my sophomore
year, I believe, of high school.
There was a professor Thomas Gilroy.
So shout out to him.
He was basically like, hey, failing.
You have a lot of energy.
Maybe stop putting it into going to your car and cranking music really
loud to bother everyone and maybe
do an extracurricular activity.
And so he put me in a, it was like a business
competition/economics competition.
So we literally traveled around the state doing like live
questionnaires, and you get x amount of points for getting them right.
And then you compete with other schools.
So we did this for like months.
In highschool?
Yeah, yeah.
victoria_1_07-28-2025_130941: Huh?
jeremy-bess_1_07-28-2025_140941: So shout out to Thomas Gilroy
for getting me into economics.
It wasn't until, oh gosh, I don't know, probably sophomore year of
college is when I was like, okay, I'm really committing to this as a degree
and likely to this as a profession, and it just blossomed from there.
victoria_1_07-28-2025_130941: Awesome.
That's really interesting.
In fact, my, one of my daughters is starting out, at
least in economics in college.
She's heading off to her freshman year at Texas A&M, starting as an economics major.
And I'm like, economics is gonna be great.
And she's we'll see.
It's, in her case it's a pathway to the business school.
jeremy-bess_1_07-28-2025_140941: Yeah.
At some places
victoria_1_07-28-2025_130941: it is the business school.
So it's, all kinds of different angles.
So I'm definitely gonna have her listen to, your interview, so it better be good.
jeremy-bess_1_07-28-2025_140941: If it's bad, I blame Patrick.
How about that?
victoria_1_07-28-2025_130941: Oh, that's good.
It's good to have somebody to blame.
So we are deep into 2025.
Annual planning cycles are in full swing, and yet we've got lots of volatility,
lots of noise in the headlines.
As we record this, the news of the day is that the US and Europe has reached
some form of agreement on tariffs.
But in the meantime, with all this uncertainty, how do we plan?
What is the advice that you guys are giving to your clients as they try
to make sense of where we are today?
jeremy-bess_1_07-28-2025_140941: I'll maybe lead off with this and then, you
know, we can do the classic tag team.
What's fun about this Victoria is Patrick and I, not only, geez,
I've known him now for 15 years.
I'm, Uncle Jeremy to his kids, but I don't know, I don't go so far as
we finish each other's sentences, we try to, but we do share a wall.
And so thank God for this wall or else I'd just throw things like
back and forth at each other.
So Pat, imagine me throwing something at you.
I'm gonna go first.
When we start thinking about planning and, yes, we're mid-year and a lot of folks
are doing it now or they're heading into the fall planning and, thinking about 26.
I think the big thing though.
That we deal with or that a lot of the conversations we're having with
clients is from a macroeconomic lens.
So yeah, we can go to our sales team and poke and prod to find
out what they're feeling and what we've done in the last six months.
Are we gonna catch up?
Are we above or, okay.
we have that, but just from a general.
are we swimming upstream or downstream is where we come into play and is
where those conversations maybe in our opinion, where they should start
is, yeah, what we're doing or where we're going in the next six months is
important, but where's the macro going?
Are we dealing with headwinds or are we dealing with tailwinds,
within maybe the four walls, maybe as the US, maybe as a globe, right?
We're all being impacted by these things.
Our thought is best plans are built right here, understanding the environment
that, that we're operating in, right?
So we start thinking about those, markets.
So again, from our perspective, the best plans as we start to think
as we head out into the future is really from that broad trend level.
But I'll let Pat kind of circle in here and see if I miss anything on that.
patrick_1_07-28-2025_140941: it's that fundamental timing is everything.
Are you swimming upstream or downstream?
And one of the.
So many examples of businesses that put together these amazing,
incredible plans, but at the wrong moment and wrong instant of time.
I think one that you know Jeremy and I like to talk about is you think back
to like technological improvements and everything that we've gone over
the past couple of decades and.
What we love today, and I know I love this today, is I can go on my phone
and click and get my Walmart order delivered to my house in 24 hours.
Amazon's right around the corner, so is Kroger or Uber Eats and all
these things just at a button click.
But really when we think about what a wonderful kind of, that is, and the
planning that went, goes into that.
This was not a new concept.
We can date all the way back to the late 1990s and there
was a company called Webvan.
jeremy-bess_1_07-28-2025_140941: Yeah, web van.
patrick_1_07-28-2025_140941: time to try to deploy this idea of online grocery.
So they received all this funding and they had an IPO and they had tons of equity.
And then you have this.com
burst, and then you have, unraveling of the, kind of economic environment
that was right around the corner and they went on bankrupt in 2001.
And maybe the consumer wasn't ready for it, but also the economy
was not at the right moment for that type of level of investment.
It's a great idea.
Just wrong timing.
victoria_1_07-28-2025_130941: you're right.
It is all about, timing Is everything.
like the stock market.
Timing is everything.
and yeah.
so we're there how does this play out when we're looking
at, how to plan out the year?
What are you seeing?
are we facing tailwinds or headwinds, or is it a swirling dervish?
I.
jeremy-bess_1_07-28-2025_140941: it's funny you say that.
Pat and I, went to, Istanbul a couple months ago, so it's funny you say that.
I never knew what that was until recently.
I would say if you logged onto any periodical.
In the last couple months, you would say, oh my gosh, I don't know.
and, I think, what's funny about that is, I don't know why this became a
thing maybe over the last six months, but probabilities of something
happening is what I'm starting to see.
So like recently you probability of recessions, it spiked, right?
you go, oh, April happened, may happen.
We saw this giant spike and the probability of the
recession happening in the us.
and then two months later it falls off.
It's, it comes back down.
But I don't even know what a probability of a recession of 45%
means to 55% back down to 30%.
I don't even know what that meant.
And, I work in this world, right?
Like economics is our world and we're doing forecast for the, macro economy.
So I think when you take a step out, you go, oh my gosh, right?
It definitely feels There's a lot of moving parts, a lot of, uncertainties.
That's the word I hear quite often.
And so yes, that's there.
But okay, take a step back.
If we park elections last year, we park the tariffs, and I know
these are big things to say, oh my gosh, you can't just park those.
But there are general trends that as we were heading.
Out of last year into this year that still hold true.
And, you could be looking, or companies can be looking at
the same data in the same way.
So I'll talk a little bit about macro pieces in one second,
but just so you all know.
When you are working, in your four walls, these, there's the same
metrics and so what, are they, pat?
it's, it's bookings, backlogs, and billings.
The three Bs.
The three Bs of business.
but, and that's, it's similar to what Pat and I are looking at, but maybe not that.
Small.
We look at new orders, right?
So think of that as bookings.
We look at backlog, right?
Think of that as, the kind of pent up there.
And then maybe we start to look at things like profitability
and such as the bookings, right?
So we look at all that data and we go, hang on, there were positives
happening as we head out of last year and we headed into this year.
and again, if we, think of that as just saying New orders, I think,
even just June of, this year is year over year growth of, I don't know,
around 13% on durable goods, right?
This is growth, double digit growth in durable goods.
That's really quite high.
And yet we're going, oh my gosh, the world's ending
probabilities of recession peaked.
And you say, yeah, but that trend of growth was already happening.
Backlogs, right?
So again, unfilled orders also cyclical rise.
So things are getting better also year over year growth.
7% I believe if we look at June of 2025.
So we have new orders looking pretty good.
Backlogs are pretty good.
And then we have to pivot and say, okay, but what about the billings?
Are we getting money, profitability?
again, profitability's up in the US and again, there's
multiple ways of looking at it.
Non-financial, corporate profits.
We look at, excluding taxes, all these things.
Go ahead, look at it in multiple lenses.
We're still talking about year over year growth.
if we think about the non-financial side, you're looking at Q1 growth, it was 8%.
That was Q1 of this year, and that was right around the time where
everyone thought the world was ending.
And I go, okay, before we dive into any other, concepts, those three.
We're suggesting already that 2025 was looking to be a reasonable year and
we'll, we'll caveat that and put it into context maybe in a little bit.
But just to start off there, those three pieces, not too shabby and,
I'm sure, Patrick's biting at the bit here to say, okay, wait, are there,
were there other things and are there other things that suggest where
we're gonna round out this year where we're probably heading into 2026?
patrick_1_07-28-2025_140941: He is a, fire hose of information,
but, we, aren't dancers.
We have two less feet, so no whirling and dervish on our ends, but with that
said, there is a lot of optimistic information that we see showcasing
throughout the remainder of 2025.
The US economy is an aircraft carrier, right?
It does not turn on a dime.
So all these signals have been manifesting throughout the course of
this year suggesting modest mild growth for 2025, and what Jeremy and I have
been telling our clients to plan for is additional modest mild growth in 2026.
That's not to say there aren't headwinds, right?
There are absolutely headwinds showcasing themselves for 2026.
We are highly scrutinizing our outlooks for 2026 based on these.
And so this is where you do come in and say, gosh, what
are some of those measures?
What are some of the things that we can peak out into the future?
The leading indicators into that year?
And again, it is mixed a nd that makes the economist job very difficult.
It's easy to be pessimistic and say, gosh, if I'm pessimistic
and I'm right, then I'm right.
And if I'm pessimistic and I'm wrong, then you know, things are great,
but that's not helpful for planning.
And so we do want to be very mindful what our forecast for 2026 is showcasing,
and that is underpinned by a lot of these longer term indicators, like
the bond market, like the money supply, like global liquidity.
victoria_1_07-28-2025_130941: Yeah that's interesting.
Are there, I've got a couple questions now as per usual.
But let's talk maybe globally, let's just put a quick global lens on this.
So modest growth in the US and we can probably roll Canada and
North America into that 'cause we all seem flow the same way.
How are you seeing the global effects?
Because, we have a lot of conversation about China is what
China is and what China is not, what Europe is and what Europe is not.
Anything stand out there?
jeremy-bess_1_07-28-2025_140941: I think the one piece is just to that
point, like the world is being impacted by what we do within the world, right?
So we're all impacted.
What happens overseas impacts us, what happens to the US impacts
overseas, so on and so forth.
you think about Canada, they actually are slightly, I guess diverting from,
if you go back a year ago and say, Hey, you know what the US is doing,
what Canada, is gonna play out and they're performing a little bit worse,
maybe because of, some of the trade implications or just they're highly,
dependent on commodities and, things like that, which is gonna impact them worse.
But if we think about.
Business cycles and we think about, wait, hang on.
Most of the world was in cyclical decline last year heading into 2025.
Most of the world still is, but then you go, okay, we don't live down there.
We don't live at the, in contraction or just slowing growth forever.
There's a point at which you hit a bottom and you start to rise again.
So even just from that perspective, it would be abnormal
to continue on this trajectory.
Another year, even if you say, heading into 2026.
And you, so you think about Europe again.
some, nations are year over year growth contracting.
and again, it depends on how you're looking at your GDP
measures or production measures.
Generally, though, a lot of those, countries are dealing
contraction just like the US.
Pretty much did.
If you think about the manufacturing side of the US was already doing
towards the end of last year as we headed into early this year, and now
all of a sudden you're starting to see year over year growth levels, very
modest, year over year growth levels.
But we still surpassed the zero line, and yet we're all going, ah, things
are really negative, blah, blah, blah.
Okay.
But we're starting to see that cyclical rise, not just in
the US but in other places.
yes.
Keeping an eye on China, right?
Huge economy, largest manufacturer in the world.
We're second, by the way, in the us, but still really, big.
And still understanding where that's going is important, but there's a lot at play.
You think of Europe and si heading into cyclical rise.
You think of the US heading into cyclical rise again, Canada lagging a little bit.
This go around probably more impacted by these trade implications and commodities.
But globally, we should start seeing these things.
You're seeing interest rates slowly drop in Europe.
You're seeing, global liquidity.
Starting to really ramp up.
And I think that's giving us some, if I was to pick one good green indicator,
I would say that one's, giving me a, one that would say that's looking
good for the next six to 12 months.
global liquidity.
victoria_1_07-28-2025_130941: the global liquidity.
jeremy-bess_1_07-28-2025_140941: Yeah.
victoria_1_07-28-2025_130941: Yeah.
Hey, Patrick, what's your take on this?
are, you and Jeremy aligned on this or
patrick_1_07-28-2025_140941: We,
victoria_1_07-28-2025_130941: the next piece of it?
patrick_1_07-28-2025_140941: we are.
We absolutely are.
I think the piece where I can.
Again, we try not to be the two handed economist, but we do tell
folks to stress test their outlooks,
jeremy-bess_1_07-28-2025_140941: Yeah.
victoria_1_07-28-2025_130941: Yeah.
patrick_1_07-28-2025_140941: testing is to run scenario analysis and make sure that
they're planning for what if scenarios.
We come in with a base case scenario based upon structural trends, real hard data.
But gosh, you do need to have contingencies in place.
What executive strategies, what management solutions can you be deploying
to be a bit more resilient to plan?
And I think a big piece of that is to run business case analysis to say, should
I be making my investments the interest rate environment, it's been pretty
sticky in the United States globally.
You look at central banks, they're easing and softening, but we are in a higher.
rate environment than we've experienced in quite a bit of time.
So now there needs to be more scrutiny.
We're not saying don't invest, but we are saying make sure that
you are running your analysis.
Make sure you're looking at the business case, looking at the return.
Return on investment in evaluating alternatives.
And then if you think about trying to shrug off some of those headwinds, it
is finding new ways to grow, whether it's diversifying product streams, or
leveraging new markets of interest.
What sorts of, diligence should you be doing today to better prepare for 2026?
victoria_1_07-28-2025_130941: Yeah, that's great.
And in fact, that's some of the things, I know you guys work broadly across
industries, but that's some of the same, the very same things that I've been
advising chemical companies to do and that, the successful chemical leaders
I've been talking with have been doing.
we talk about scenario planning coming into 2025.
whole lot of uncertainty around tariffs.
it appears that tariffs are settling down, or at least becoming known here in, 2025.
There's always room for change, right?
Alas, that there's always room for change, but understanding what, how you're gonna
respond, in different environments.
'cause of course, things change along the way.
I think one of the things that's interesting and, this I think
falls definitely into the, economist camp, in my opinion,
which is around policy influences.
So I think if we look at what's happened, this year a big policy influence
has been not just around tariffs, but around a changing point of view,
both US and Europe, around, energy.
Energy subsidies, the role of sustainability and more, what are the
big policy pieces that you guys are watching as you try to think about how
this, world may evolve and move forward?
patrick_1_07-28-2025_140941: Yeah, I think the big one is
obviously in the United States.
We were talking about the tax bill, a big, beautiful bill that just got
unleashed, just a couple weeks ago.
I think there's a lot to unpack in there.
And so you can think about just the near term effects of that and
the long term effects of that.
And in from a kind of that economic lens, there's a lot of policies in
place intended to juice innovation, intended to juice, investment into the
US economy intended to try and stimulate.
Growth and that, bodes well for some of those kind of more, tailwinds for 2026.
we don't have a full formalized analysis on every single policy that's in there
yet, but it's one that we're diving into.
But when we think about what it means from a government standpoint to try
and, extend tax price for, extend tax cuts, or also, increase government
spending and offer further incentives into R&D, all of that is intended to.
Spur the economy, add growth, and the.
Again, consequence of that is more long term.
Thinking about some of the more structural components of our economy
is increasing deficit spending and at an increasing rate and what that means
for, challenges in headwinds further out into the back half of this decade.
When we talk about debt to GDP ratio growing, and I think one that is
even of more interest to Jeremy and I is, what's going on with interest
payments from the federal government?
You're now having all these additional dollars being spent on
past production, not for production.
And I say past, it'll be, past will be 2026 production.
So you have all these interest payments blowing right through a
trillion dollars and further beyond that, and the interesting measures
when you look at interest payments as a percentage of defense spending.
And the Hoover Institute has a really interesting piece on that measure
specifically that says, once interest payments from a federal government budget
exceeds defense spending, meaning it's, above a hundred percent defense spending.
You start to see a more tricky geopolitical climate, and you can
look at like late 15 hundreds.
Spains, the Hasburgs ran into that late 17 hundreds, France and Napoleonic
era, and then even, Britain, the challenges that they face at the end
of the 19th and into the 20th century.
And so it's a very interesting measure one that you know is on our minds
as we peek into the future and say, gosh, what's happening to our deficit
spending at higher interest levels?
And what does that mean for just a tensor geopolitical situation?
victoria_1_07-28-2025_130941: How do, how close are we getting
from a interest versus defense?
jeremy-bess_1_07-28-2025_140941: We.
patrick_1_07-28-2025_140941: we did exceed it in
jeremy-bess_1_07-28-2025_140941: We succeeded it,
We
patrick_1_07-28-2025_140941: are above a hundred percent.
And so that's like kind of that trigger point that says, gosh, now there's some
more, risk of geopolitical challenges.
victoria_1_07-28-2025_130941: Got it.
That's interesting.
so what's a chemical?
Yeah, go ahead.
patrick_1_07-28-2025_140941: I was gonna say Ger, Jeremy's got the
optimist hat on, and I'll come in with a little bit more, grounding, but
jeremy-bess_1_07-28-2025_140941: but.
patrick_1_07-28-2025_140941: something that we think about.
jeremy-bess_1_07-28-2025_140941: I think what ends up happening is I'm just
more optimistic no matter what, phase we're in, the business cycle, right?
it's so he, so Pat mentioned deficit spending and we go,
okay, what does that do?
And you go, oh, that long term can increase inflation, right?
More money chasing the same amount of goods, right?
That puts upside pressure on pricing.
Like these are core things that are happening, but at the same
time, that could bolster sales.
Now profitability is a whole nother thing, but if you start to think
about, what it can do to sales, that can buffer, some levels of growth.
Shout out to those folks that are doing their 2026 planning
and only looking at the top line.
Please, drill into your P&L.
There's some magical things that happen.
All of a sudden you go, oh geez, I'm that, Two, early two,
or Yeah, early two thousands.
Company who, unfortunately went bankrupt.
Webvan, I believe, right Pat?
That's what it was called.
patrick_1_07-28-2025_140941: What, van?
victoria_1_07-28-2025_130941: Yeah.
jeremy-bess_1_07-28-2025_140941: but, when I think about the
chemical industry, I go, oh, the inflation's like already happening.
We're, starting to see, chemicals, the producer price index for
chemicals and allied products, right?
It's kinda a broad measure Of, of chemicals.
It was negative as we were in 2024.
We're starting to get a little bit positive as we head into this year.
It's bouncing around the zero line.
Our outlook as we head into 2026 is more inflation.
Our outlook into 2027 is similar to that.
So we're talking about higher levels of inflation as well.
I don't know, he just, he's painting the picture that, that
this deficit spending is an issue.
And yes, it absolutely is likely one of those levers that will
drive higher levels of, inflation.
I.
victoria_1_07-28-2025_130941: Yeah, so higher inflation
related to the chemical industry.
Good for pricing, bad for volumes.
is that the way to think about it?
jeremy-bess_1_07-28-2025_140941: I think the, the hardest part companies are gonna
have trying to pass on the raw pricing of commodities that we're expected to have an
increase on and pass it on to your clients and customers in a very meaningful way.
I think gone are the days where you just slap broad percentages
to it and you call it a day.
This is on the heels of some of the highest levels of inflation
we've dealt with in decades.
So smart strategic pricing is probably gonna be something that I think folks
are gonna have to put more of an eye on than maybe they have probably
in the last 20 years, and maybe
more bites more often, right?
So you're not doing these sticker shock moments, to your
customers small bites more often.
Not that we're saying to dupe your clients, but small bites more often lets
people deal and have a, a larger appetite for accepting those price increases.
It's a common thing that the restaurant industry will, generally try to do.
victoria_1_07-28-2025_130941: Yeah, absolutely.
And I think that's one of those, areas that people are talking
about today, how do they adjust and accrue pricing appropriately?
How do you create value beyond pricing?
Because of course, one of the challenges across the industry is that, there's
a lot of oversupply depending on what part of the market you're in.
So you know it costs are going up, demand is going down.
You're in the squeeze because of the oversupply.
So finding the right paths through it, and yet, still wants
to be covering their costs.
As an employee, you still would like to make more money next year.
You would like to still have some of the same
perks, whether it be travel, benefits, other
jeremy-bess_1_07-28-2025_140941: Sure.
victoria_1_07-28-2025_130941: there's a, lot of, factors that
go into play into all of it.
just in terms of this whole decision making process.
jeremy-bess_1_07-28-2025_140941: Yeah.
If I can just say though, another, again, may, it's maybe hard for me
to not be somewhat optimistic in, in, in the more intermediate term is, you
just mentioned the, wage aspect of it.
So the health of the consumer, right?
And you go, my gosh, wages are pretty strong.
Even if you adjust them for inflation.
You're talking about real median earnings, year over year growth of, 3.5%
that's on top of inflation.
So I guess.
Like another green check to say, the US.
Consumer is, broadly speaking, what drives most of the US economic growth.
So you look at the consumer, how they're doing, even financially,
delinquency rates, not too shabby.
Wages pretty darn good.
That should support some levels of positive outlook as we head into 2026.
So just, layering that on a little bit there, to further give
evidence for the growth side.
So that maybe will offset some of the downside pressures that, that, inflation
will inevitably have, on your P&L.
victoria_1_07-28-2025_130941: we, maybe we've already touched on this, but I'm
gonna throw this question out there.
We can cut it if we need to.
we talked before when we were, doing our little prep around, how you guys
really look at hard financial data, and less on sentiment indicators
when you're making forecasts.
So you've already talked about this whole, we're now, looking at the likelihood
of a recession and probability models, which somewhat seem sentiment based.
I think it's maybe trying to make something that's a
sentiment more of a hard number.
But what are the, what's the hard financials that you guys are
looking at when you're looking at what's going on in the market?
What should chemical leaders be looking at when they're trying to
predict what's going on, and how to adapt and adjust as the world does?
patrick_1_07-28-2025_140941: Yeah, so I would say we've
hit on a few of 'em, right?
The, three Bs of businesses, backlogs, bookings, billings, and just how that
relates to the overall macro economy.
Corporate finances is obviously something that we've talked about already too, cash
on hand profitability, things like that.
But we've mentioned the consumer and so I'd love to talk about hard data
from the consumer because the consumer health is what really is fundamental
to growing the US economy 'cause we are such a consumer driven economy.
And so we can look at the financial health.
Of the consumer and say, how are they doing right now?
And I know a lot of the sentiment is like, gosh, things are terrible.
We are uncertain about the overall economic climate, so
we don't wanna spend our money.
And yet that's not quite what we're seeing.
We can look at retail sales and say, no, we absolutely are spending our money.
We can look at the, say credit card situation.
And I know the really popular, headline is, oh, the US credit card, balances
victoria_1_07-28-2025_130941: Yeah.
patrick_1_07-28-2025_140941: high levels.
And yeah, that's, absolutely true, but that statement's
almost always true, right?
We are almost always at record high levels of credit card debt every single month.
it's the, reality is, what is our ability to service that credit card
debt?
have seen a rise in credit card delinquency rates.
Starting in 2022 as interest rates started to really ratchet upwards.
and they've since really started to plateau.
And that rise commenced for in 22, was, lasted all the way through 2324.
But that plateau is occurring around 3% of a credit card delinquency rate,
which when you compare that to history, say pre great recession, which was 5%.
So yes, things are getting worse.
But kind of peeking out at a much lower level than what we saw
before, a great financial crisis.
And then we can talk about the wage environment.
We can talk about the employment environment and say that things
are still looking decent there.
We're not saying things are all rosy and peachy, and I know we are.
I try to say this and emphasize this all the time.
Jeremy and I, we are macro economists.
We zoom out at a 30,000 foot level and we look at data very unemotionally.
We are
robots.
We have no, no friends, no fun.
We are robots, but that's ultimately what we're doing is zooming out.
I know there's a lot of bifurcation within the economy between low wage
earners and high wage earners, and that's all a bit more in the weed.
So when we zoom out for the overall macro economy, things are looking okay from
a consumer standpoint, not an a plus by any means, but, thinking about the report
card C to B, maybe as Jeremy says, C'S
jeremy-bess_1_07-28-2025_140941: C Cs get degrees.
Cs got degrees.
victoria_1_07-28-2025_130941: But do they get hired is the question?
jeremy-bess_1_07-28-2025_140941: I think that's, I think that's the key though,
is if we think, wait, you're telling me that consumer's A, a, a C or a B.
But where we are coming off of these huge, this, huge growth that happened
in the US economy a couple years ago.
We've started to, unwind that growth
and in many markets we went negative.
And now we go, okay, where are we?
that's way different than other, recessionary periods where, oh my gosh,
on the backside of the business cycle when we were approaching the bottom.
The consumer was a D, right?
or an F.
And, if you think about the Great recession and, you're getting
kicked outta school, right?
So I think, it's very different.
Context is key.
It's why we were supporting, hey, this backside of the business
cycle is not gonna be as bad.
The consumer's in a very different position.
and now we're starting to say, where are we going?
That linear planning or linear thinking, if that's what we're gonna
be doing as leaders, I think will get us in trouble if we go, 2024 was.
we were swimming upstream.
2025 really hasn't been much better.
I'm gonna be planning for that in 2026 and 2027, and I'm gonna sit
there and say, geez, that's multiple years decline or swimming upstream if
that's what you're, wanna, call it.
That's usually unlikely in the US right?
We would likely be more closer to the bottom.
And so I think context is key.
The consumer being at a a C or a B in the backside of the business cycle
is actually a, pretty good feat.
victoria_1_07-28-2025_130941: Yeah, that's actually, that's a good
reflection and a good lens on this.
'cause I think you're right.
from a chemical industry perspective, people are saying, this is the longest
down cycle that we've seen and yet.
People also recognize, as you've talked about, the peak was in
2021, 2022, when it far exceeded what a normal growth would be.
Because we had COVID, and the post COVID effects that really energized
industry, changed up, supply, demand, et
cetera.
then people would say, we've settled down Now, again, we're in a bit of
a tempered market, I think a bit oversupply, again, in certain places.
But then there's a lot of companies I talk to that say, a pretty good year that
jeremy-bess_1_07-28-2025_140941: Yeah.
victoria_1_07-28-2025_130941: okay.
so I think it goes along with the same as the consumer sentiment, right?
Much like you say some, there's a bifurcation perhaps in the market.
Some are saying, oh, this is horrible.
And certainly whenever I go to the grocery store and I'm like, how is this?
I'll tell you the one that really kills me.
the cost of soda, Coke, Pepsi, what have you.
I'm like.
What the heck.
And I have a, one of my
jeremy-bess_1_07-28-2025_140941: Yeah,
victoria_1_07-28-2025_130941: for KE Dr.
Pepper, and I'm like, are you kidding me on these prices?
She's that's what it is.
I'm like, oh my gosh.
Okay.
jeremy-bess_1_07-28-2025_140941: we.
victoria_1_07-28-2025_130941: And so I guess to me that's
one of those, kids drink water.
that's how much to it.
But, I think it goes with this whole what we.
feel and see.
And think that, people maybe say, oh, I'm cutting my spending and then the real data
shows I'm not cutting my spending, I'm
jeremy-bess_1_07-28-2025_140941: Yeah.
victoria_1_07-28-2025_130941: and buying and doing.
And I think that's true.
So I think separating sentiment from fact, and story from fiction
is, becomes really critical.
jeremy-bess_1_07-28-2025_140941: I think a big eye on the consumer will be.
Not much.
the second quarter results are coming out.
I guess depending on when this, which is aired.
But this week, the week of the 28th of July.
But if, we, maybe zoom past that one.
'cause you're gonna see, GDP is likely to come in pretty positive.
The Atlanta Fed is already suggesting that too.
But if we think about third quarter, where, oh my gosh, you have this
kind of flip flopping inventory.
from, imports and all of this stuff, it could muddy up those results as we
head in the third quarter, which all of a sudden is gonna increase that whole
probability of recession happening again.
But I want everyone to be zooming in on the consumption expenditures, right?
The US consumer expenditures.
That's gonna be the important piece to look at.
As of now, year over year gross, we're still positive.
The first quarter was still, more positive than, the previous year
things were looking pretty good.
I think we just need to focus in on that as reading between some of the, noise
that we're hearing in, those headlines.
'Cause again, we might have a lot of that volatility through, through the
third quarter of this year as well.
victoria_1_07-28-2025_130941: Awesome.
right, so I'm gonna, that maybe your close on that, if, there was
one thing that as a leader I should be looking at when I'm, gosh.
And I.
know you're gonna tell me it's not one thing 'cause it's a
basket of things, but that's okay.
But I'm still gonna ask for one thing.
thing I should be paying attention to.
What would it be?
patrick_1_07-28-2025_140941: There's a million things.
The one thing that I will keep a pretty strong eye on is the bond market.
Bond market provides a really good, long insight into the risk of the US economy.
If you're thinking about long-term business planning, what
the bond market does and says tends to be a core reflection.
And even when we look at, the policy standpoint, the bond market has
seemed to, circumvent some of the.
Trade conversations and, it seems like folks and the government folks and the
businesses listen to the bond market.
And so I think we all should be keeping an eye on the, interest rates and
the yield curves and what that out into the future for 2026 into 2027.
victoria_1_07-28-2025_130941: Awesome.
All right, Jeremy, same for you.
One thing.
jeremy-bess_1_07-28-2025_140941: I'm, gonna, I'm gonna piggyback off that and
say that's, a very similar market or leading market to, to take a peek at.
I know we yell, what's the fed doing?
How many interest rate drops are there gonna be?
And maybe we'll get one this year.
But actually Bond market's doing and them are in the market saying, Hey, how are
we thinking about risk in the future?
Is actually what you know, matters to the consumer a lot more.
You think about mortgages, they're not tied to the
federal funds rate necessarily.
They're more tied to the 10 year bond, right?
So you want mortgages to drop.
Don't be looking at what Ron Powell's doing.
Look at what the bond market's doing.
'cause we could drop interest rates and not see our 10 year
debt, our 10 year treasury, rate.
Drop by as much.
And that's because maybe the market's saying, hang on,
the US is still, more risky.
And then that has a lot to do with many other things, but we're keeping a close
eye on that because yeah, as of right now, interest rates being more elevated,
then that's then maybe that's a miss.
We had from last year being more elevated than we thought.
This year, could be some downside pressure, not just in
26, but actually beyond that.
So that's more of a concern for us.
victoria_1_07-28-2025_130941: Awesome.
Alright, and I'm gonna do my final, question, which I'd like to ask the
leaders and the guests on the podcast is what advice would you give if you
look back on your career, if you were advising yourself as you enter the job
market, or if you're advising a young professional entering the job market
that frankly maybe wants to be doing what you're doing, but wants to understand
how to navigate unpredictability that wants to be an advisor to all the
leaders that you guys are advisors to, what piece of advice would you give?
patrick_1_07-28-2025_140941: I'll take a stab at that.
I think, again, there's a million things that we could say, but
as a young professional, I know I, I went through this myself.
It's very easy to allow yourself to be tug award and pulled into a million
different directions and it can seed some doubt in your own analysis.
Seed some doubt in your own kind of trajectory and what you're
anticipating, what you're planning for, what your analysis says.
And so ultimately, just confident in what you're doing.
not without reason, right?
Have analysis, be able to back it up.
But if you have done good work, sound work that you believe has
been stress tested, and has been reviewed, and all these things.
Be confident in what you're doing because I think that's how you can
provide the best sense of clarity.
Jeremy and I work a lot with business leaders and us two
basically do the two handed economist thing without real numbers.
Real data, real analysis or being allowed to be pulled in different directions
is not advising, it's not helping.
We need to be clear and direct and good, planning for what we anticipate.
So that's
victoria_1_07-28-2025_130941: I love that.
Very cool.
Jeremy, how about you?
jeremy-bess_1_07-28-2025_140941: It's, actually, it's not just something
I'd tell, myself back in the day.
It's maybe something I'd tell myself even just, yesterday we're all still learning.
I, I've had, I.
Had good mentors to help me with these things.
the idea of, celebrating the wins or the highs?
The highs too highs or the lows?
Too Lows.
I am the, latter.
The, lows are low.
So when something happens, I think it's the end of the world right.
There are there, and I know I was optimistic all day, but when I do
something wrong or, there's just.
Negativity happening in the work I'm doing or, so on and so forth.
I think it's, the straw on the camel's back, it's just gonna break everything.
All of it's gonna fall apart.
and I don't know how many times, I'm sure we all do this, where we
think this is the biggest issue ever.
and then two weeks later, I don't even remember what I was thinking about.
It's just.
Things, work themselves out or those lows actually turned into wins.
Having a little bit of confidence in faith that those things will play out your work.
ideally you stress test these things, you figured that out.
You have confidence in that you can work yourself out.
It makes, sleeping at night better.
But most importantly, when you're talking about, running a team or a company.
You're leading by example.
You're less stressed out.
You're, you're less reactive.
and, I think that helps.
So I think, just trying to, not think the lows are so low is, an important piece.
victoria_1_07-28-2025_130941: Awesome.
I love it.
Alright guys, Patrick and Jeremy, Thank you.
Thanks for
jeremy-bess_1_07-28-2025_140941: Thank you
victoria_1_07-28-2025_130941: really appreciate your insights.
jeremy-bess_1_07-28-2025_140941: Thank you.
And we'll look forward to seeing you at The Chemical Summit.
I.
victoria_1_07-28-2025_130941: I.
know I can't wait.
That's gonna be super exciting.
September 30th and October 1st in Houston.
And as always, thanks for listening today.
Keep following, keep sharing, and we will talk with you again soon.