The Compound and Friends · Monday, July 13, 2026
Recalling the 1990 recession, Colas illustrates how a sudden oil price spike, triggered by Iraq's invasion of Kuwait, led to immediate layoffs and financial distress across the auto industry and its suppliers. This demonstrates how a single catalyst could rapidly impact production and employment.
“In the 1990 recession, you saw initial claims go from 300 to 500 a week in a matter of weeks after Iraq invaded Kuwait and oil prices spiked. That was it. That was the whole story. It was amazing.”
“So, suppliers don't wait. They don't wait to see, ah, maybe this is just a dip. They say, we have too many people. We're spending too much on CapEx. We literally don't have the cash to spend on CapEx. Every auto supplier I cover in the 90s was close to bankrupt. Chrysler was essentially bankrupt. All because of an oil price spike. That was it. That was the whole story. It was amazing.”