Commodities and the US economy

Commodities move with the business cycle but peak later. The graph above shows some of the unique features with commodities as an asset class. 

• First, the early 2000's were the period of a super cycle in commodities that was unrelated to the changes in GDP and industrial production. 
• Second, the recession in the US already began before there was  a peak in commodity prices. 
• Third, the recovery in commodities came later then the recovery in the real economy. 
• Fourth, the peak in industrial production came first and then there was a peak in commodity prices. 
• Finally, the rent upturn in commodities does not follow the pattern that we have seen in the past. The recovery has more to do with supply shocks such as the drought in the Midwest then the fluctuations in the real economy.