Empty grocery shelves are everywhere. It's a major problem all across the nation and consumers have been expressing their frustration with the lack of supplies and the soaring price of everything. More than one year later, the health crisis continues to have an impact on the things Americans love to buy, even their favorite food, cars, and much-needed electronic equipment. In the stores, the shelves are often empty due to an increased demand for supplies, combined with shipping and manufacturing delays. It seems that dark clouds are gathering once again and threatening us with another period of extensive shortages and explosive prices.
What we have seen from inflation so far was just a hint of what is coming next. This month, the US inflation rate has reached levels not seen since 2008, and broken supply chains certainly have not helped with that equation. That means products people need and want are again in short supply -- and we all have witnessed what happens when consumers hear that more shortages are coming. Since the beginning of the year, Americans are facing a relentless rise in consumer prices, and even though politicians and policymakers have been trying to reassure us that those increases are only a "temporary blip," it doesn't feel so reassuring to consumers who are seeing the prices for so many goods surging so much and so fast. Compared with the same time last year, consumer prices rose 5.6 percent.
While supply chain bottlenecks continue to dent manufacturing growth, consumer sentiment has sharply collapsed in recent weeks amid concerns about rising inflation. Already, higher prices are making it harder for people to afford the same products, and the latest reports show that retail sales fell more than expected in July due to shortages, increased prices, and the fact that the boost from stimulus checks has faded, suggesting a slowdown in economic growth early in the third quarter. Businesses across the United States are also growing less confident in the economic recovery, according to a survey released on Tuesday.
On top of part and product shortages, as well as late deliveries, companies are facing labor shortages that have been compromising their ability to operate at full capacity. The National Federation of Independent Business Optimism Index dropped 2.8 points to a reading of 99.7 in July, erasing all of June's gain. Ultimately, owners can only sell more and recover from the losses suffered in 2020 if they acquire more supplies and inventories from their supply chains, and if they have personal to handle their product until it makes it to the shelves. But the strains they are currently facing illustrate the growing imbalances between supply and demand and how the Fed's policies ended up making things worse by artificially fueling consumer demand without boosting manufacturing growth, resulting in shortages and elevated prices, and also creating a historic labor shortage at a time the economy desperately needs more workers.
In every sector of the economy, shortages continue to erupt as the new virus outbreak messes with shipping, demand, supply, and all the other levers of global trade. There's nothing in the near term that looks to control the steady rise in prices. “We still have a very challenged supply chain,” as explained by Naveen Jaggi, the president of retail advisory service JLL. “Many retailers don’t expect any sense of a balanced supply-chain recovery until the summer of 2022 or even later". Everything that is shipped in a container is going to cost more, Jaggi says, as he highlights that "this is a global supply chain disruption. It’s massive from Bangladesh, South Korea, India, China, Europe, and the U.S. The biggest challenge for U.S. consumers will be that demand will outstrip supply,” he points out.
Evidently, the supply chain crisis is just one of the factors contributing to the worsening of shortages all across the nation. America’s many shortages have many different causes, ranging from domestic monetary policies, trade policies, aging infrastructure, and extraordinary spending in the wake of the health crisis. Many factors are also playing into this year’s price hikes, and it's the convergence of all of them at a time when consumer demand is typically more elevated that is making business owners and retailers increasingly desperate as the holiday season approaches. At this point, we can only hope not to see a repeat of the chaotic waves of panic buying we've seen last year. But the truth is that we all should brace for empty store aisles, barren car dealerships, and depleted online inventories once again because everywhere you look, there’s a new shortage, and as global events are starting to spiral out of control, from now on, things are only going to get worse.
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