Where interesting people say interesting things. Today it’s Kokou Agbo-Bloua, global head of economics, cross-asset & quant research and UK head of research at Societe Generale
Fashionomics: The Good, The Bad and The Ugly
Since the dawn of time, clothing has been an important part of our human experience. We lost our fur at least 1.2m years ago according to reports by scientists. What we wear is now a key part of the identity we convey. The issue today is the sheer quantity of clothes we produce and throw away.
How many of you look at your closet full of clothes and feel like you have nothing to wear?
Adverts are all trying, desperately, to quench our insatiable thirst and desire ‘to dress to impress’. Collection launches are no longer seasonal. Many low-cost clothing stores offer new designs every week. Reports by the Ellen MacArthur Foundation show that, in 2000, the industry made 50bn new garments; nearly 20 years later, that figure has doubled.
This is even more alarming as the fashion industry is responsible for 10 per cent of global carbon emissions, more than all international flights and maritime shipping combined!
When it comes to the water footprint, further reports show it takes roughly 3,800 litres of
water to make your favourite pair of jeans.
Now, it gets worse. According to the United Nations Environment Programme, of the total fibre input used for clothing, 87 per cent is incinerated or disposed of. Every year, we drop half a million tonnes of plastic microfibers into the ocean – the equivalent of 50bn tonnes of plastic bottles.
Can sustainable fashion reach net zero and defeat the irresistible forces of ‘fashion economics’? And could the future of fashion be a world where we wear the same super durable clothing, like Marvel’s superheroes? It’s a topic we dig into a recent 2050 Investors podcast, Fashionomics: The Good, The Bad and The Ugly.
A few musings on inflation
In 2020/2021, governments in the US and Europe launched a “fiscal whatever it takes” response to the war against Covid-19 by supporting their respective economies, put in hibernation to save human lives and livelihoods. In 2022, further spending targeted at lower income households was made to address the cost of living crisis in the aftermath of an unprecedented increase in energy prices caused by Russia’s war against Ukraine.
That led to an inflation outbreak…
The combination of negative supply shocks, supply chain disruptions with China’s zero Covid policies, substantial cumulative excess savings in the US and Europe reaching record levels (8-10 per cent of GDP) and greedflation (higher profit margins led by strong pricing power by corporates) have all contributed to excess demand vs constrained supply, thus causing higher headlines and core inflation. China’s re-opening has failed to trigger an economic rebound similar in magnitude to what was observed in the West despite household excess deposits reaching close to eight per cent of GDP.
But have corporates developed a natural immunity?
Central banks’ response to fight the ‘inflation outbreak’ has been sharp and aggressive. Headline inflation has now normalised in 2023. However, core inflation remains a concern as wage growth continues to be sticky in the US and in Europe as unemployment rates remain at record lows because of a tight labour market and corporates having developed a ‘natural immunity against higher rates’ because of healthier balance sheet and resilient profit margins.
Feast your ears on this: our broken food system
Imagine your taste buds could hear. Eating your favourite meal would have the same sensory stimulation as listening to classical music.
A Filet Mignon with a nice glass of red wine would be like listening to Eine Kleine Nachtmusik by Mozart.
However, the food industry also has a significant and ‘fat’ carbon footprint (27 per cent of global emissions), generates a lot of waste, chemical pollution with significant adverse impact on biodiversity. The current food system is unfortunately not sustainable.
How do we feed a world population that is expected to reach 10bn by 2050? That’s the crux of our latest 2050 Investors podcast, Carbon-Free Calories.