Dow Chemical CEO: US Underestimating Inflation

Sunday, June 01, 2008 | 03:30 AM

On Wednesday, Dow Chemical Chief Executive Andrew Liveris made a high-profile announcement that Dow would increase its prices by as much as 20%, starting June 1. Dow, the top U.S. chemical company, said the plan was necessary to offset the impact of rising costs for energy and related raw materials. Over the past year, Dow has already increased its price by about 12%, but those price changes have been phased in gradually rather than implemented all at once.

In the interview, Liveris said he thinks the U.S. is underestimating the level of inflation in the economy and he expects the rise in energy costs is beginning to destroy demand. Liveris expects the price increases his company made will eventually be passed on to the consumer:

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Liveris

Andrew Liveris on CNBC

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Excerpt:

"I do think we've hit a raw nerve," Liveris said in an interview on CNBC's "Squawk Box." "I do think, out there in the world that we all are living in, I think the consumer is screaming, and I think it's the topic du jour, and every company is in a different part of the value chain."

"We're in a part of the economy that is very elastic," he said. "So unlike electricity, or unlike transportation, which up until now has been relatively inelastic, we're getting demand-destroyed."

Liveris estimates Dow uses about one percent of the U.S.'s electricity to make its products, which become components of other consumers goods, and the equivalent of about one million barrels of oil a day.

"We've done everything at Dow to be cost-efficient, energy-efficient," he continued. "We've diversified our mix. We've gone overseas for low-cost joint ventures. I think everyone has to bear some of this out-of-control energy policy."

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Source:
Dow Chemical CEO Says US Underestimating Inflation
CNBC.com | 30 May 2008 | 08:14 AM ET
http://www.cnbc.com/id/24888493

Sunday, June 01, 2008 | 03:30 AM | Permalink | Comments (3) | TrackBack (0)
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Comments

Here is the ‘Economist’ story about emerging market inflation.

http://www.economist.com/finance/displaystory.cfm?story_id=11402856

Notice the chart: Brazil 5%, China 8.5%, Russia 14%. etc… Even Euro zone inflation is nearly 4%.

http://www.iht.com/articles/2008/05/30/business/euecon.php

Now our currency is either way down against the currencys they discuss, or fixed to it. How on earth can we have lower inflation if our currency is down, say 60-70% as it is against the euro where inflation is 3.6% and fixed to nations like the Middle East with 10% plus inflation and China?

Oh, and our inflation-adjusted GDP number GREW at 1% in the first quarter. Every business, in aggregate did 1% more business, annualized, last quarter.

So... the 'Price is Right,' right? Is there a Scott McClellan in the BLS? Come on down.


Posted by: VennData | Jun 1, 2008 8:35:38 AM

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