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Supply chains and the shortage economy

Mount Equity Group Tokyo Japan > News > Markets > Supply chains and the shortage economy

America is experiencing extended shortages of goods without recent precedent. The global transportation system is heavily congested, with dozens of ocean freighters waiting off California to dock. Is America’s economy beginning to emulate the former Soviet Union?

Consumer spending quickly recovered from a sharp decline at the COVID-19 pandemic. More significantly, the pandemic and the policy responses changed buying plans. Consumers shifted from dining out and entertainment to purchasing goods. Stay-at-home orders led to a demand for building supplies for DIY projects while remote schooling led to huge purchases of Chromebooks. COVID stimulus checks encouraged additional purchases.

Every economy features capacity constraints. Setting up new factories takes time; we can only ramp up production of lumber or computer chips modestly in the short run. The changes in the composition of consumer demand consequently created challenges. The…

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