Real economy assets, including commodities, energy, agriculture, and industrial inputs, are trading at historically low valuations relative to financial assets. Based on an 80-year dataset comparing the U.S. Producer Price Index to the S&P 500, the ratio has declined to its lowest level on record, reflecting a prolonged divergence between physical production and financial market performance.
This trend accelerated after 2001, when China’s entry into the World Trade Organization contributed to a sustained period of global supply chain expansion and cost deflation. Lower input costs supported corporate profitability and equity market growth, while suppressing real economy pricing.
Today, structural shifts are emerging. Deglobalization, reshoring, and supply chain fragmentation are beginning to reverse the forces that drove this divergence. At the same time, conditions such as fiscal pressure and underinvestment in physical production resemble earlier periods when real assets repriced more broadly.
Within this context, assets tied to the real economy, such as farmland, may play a distinct role due to their connection to production, income generation, and sensitivity to inflation dynamics.