The impact of the pandemic has been more profound socially and economically than anyone expected, probably the biggest out of my window since the second half of 1348, when the first plague swept through and killed half the population. Without enough people to plough the land and tend the crops, livestock became the only economic way to earn a living. We have had sheep here ever since.
Large numbers of people around the world are now unemployed, and poverty has risen sharply in all economies. Despite this, the price of commodities has been on the rise, with oil sweeping above the US$50 per barrel that we were assured it would never pass again. This includes hides and skins, which are determined to remind us that supply and demand often bear little obvious relationship.
On the demand side, the anticipated fast recovery is being slowed by accelerating Covid-19 outbursts in Europe, Brazil and by the sounds of it, in India and Russia also, although their governments are not so keen on releasing data. Hong Kong has forced the APLF to postpone again until November by saying it will keep quarantine for all into the autumn. As long as no new variants arise that can beat the vaccines, perhaps by then, it will all subside.
The highest U.S. economic growth since 1951
The jump in commodity prices will make things hard for tanners reeling from reduced outputs and Covid compliance expenses, but it is driven by a real optimism for the future. Only a week ago, Goldman Sachs showed us why, when they raised the 2021 GDP growth forecast for the U.S. to over 8%. This hugely positive view of the U.S. economy – the most optimistic of all analysts – suggests the highest growth since 1951 and anticipates the benefits accruing from the US$1.9 trillion package that is starting to be paid out and successful progress on infrastructure upgrading. If it works out as hoped, it will be the first time in well over a decade that the U.S. has outshone China in helping to pull the world economy back up.
There is no doubt this will be of global benefit, as with many eating and drinking establishments in the U.S. still shut or offering only limited service, many household cheques will be spent on buying goods, of which no doubt some of this will go to footwear and other leather goods made overseas.
With the price of oil also having risen, synthetics should also rise in price, so if tanners are careful, leather might avoid loss of market share. Veronica Bates Kassatly’s recent article in Apparel Insider on Natural versus plastic: how the truth got twisted is a must read in this continuing battle. She has great knowledge in this area and is a meticulous researcher. With COP26 coming up soon, we must not let the wicked Higg Index view of leather against plastics prevail, as this will inevitably lead to bad decisions.
Evidence again that tanners must be honest and transparent about the sustainability of leather, but never silent.
March 24, 2021
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