S&P Global Market Intelligence chief business economist and executive director Chris Williamson joins Catalysts to discuss how geopolitical tensions and supply chain challenges will weigh on the US economy.

Williamson argues that the global economy can be viewed as a dichotomy between the struggling manufacturing economy and the relatively healthy services economy. "The big question is, is manufacturing going to drag the services economy down and lead to a deflationary almost spiral kicking in?... That seems to be the consensus at the moment that you're going to get this playing out, which is why everyone's focusing so much on the manufacturing numbers at the moment," he tells Yahoo Finance.

However, he notes that interest rate cuts could stimulate demand and turn the manufacturing economy around — especially if geopolitical tensions do not escalate. "If a steadier geopolitical environment you get interest rate cuts, stimulates demand, stimulates investment. And this time the service sector or the financial services sector can start to lead manufacturing out, in which case you get more of an inflationary cycle coming back through again. But it should all be manageable," he adds.

Williamson concludes, "This is the interesting thing that is going to be watched in the coming months really, this interplay, who's going to win out? Is it manufacturing dragging services down or interest rates going to help sustain services growth and lift manufacturing up?"

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl