Container ships extend far into the Pacific, waiting for their turn to unload the cargo California ports. The companies Stop production Because they cannot get enough computer chips to make a computer car. Long-dormant restaurants eventually see an increase in customer demand, but cannot find enough. The cooks.
These are all headlines of recent times, and they have one thing in common: they show how America’s great economic challenge has breathed 180 degrees for a short time.
Only a few months ago, the nation faced a heavy Lack of demand For goods and services that threatened to prolong an epidemic-induced recession for a long time beyond the point related to that virus. The central economic problem of 2021 looks polar opposite. Businesses are faced with the challenge of producing an adequate supply of goods and services – whether of wood or of cold beer – to meet that resurgent demand.
The economy’s largesse closed last spring and are now turning back on. But with nearly three million Americans vaccinated per day and nearly $ 3 trillion in federal money courses through the economy, it is an open question as to how long it will take for businesses to gain momentum. Their collective success or failure will determine whether this is a year of Goldilocks’ economic situation, or a dismal mix of price spikes and persistent scarcity.
“The global economy is weak because it never really recovered,” said Nada Sanders, a professor of supply chain management at Northeastern University. “Large-scale pent-ups are consumer demand, but it is important to be connected to supply and demand because when you are short of supply you don’t have the products that consumers want.”
After heavy disruptions compared to the previous year, the complex network by which major industries lay flat and the services available have become catastrophic. Many workers have left the labor force. Manufacturing and shipping worldwide went through temporary shutdowns, after reopening, random recent events such as the Texas ice storm and the Suez Canal blockage caused disruption.
Semiconductor companies cut back on manufacturing chips destined for cars and trucks when major automakers reduced production during the early days of the epidemic. Semiconductor firms tended to make chips needed for in-demand computers and other home electronics.
The auto industry is now facing the repercussions of that cutback. For two weeks, Ford Standing For example, its popular F-150 truck-making factory. Over all, analysts at the IHS market This kind of experience One million fewer vehicles will be built in the first quarter of 2021 due to disruptions. This means that American consumers who want to put their new incentive checks towards the car may face fewer options and take advantage of less negotiation over price.
The labor market, meanwhile, presents a paradox. The unemployment rate, 6 percent, is well above its foregoing level, and the job market is even worse if you include Americans who say they are no longer looking for work. Yet many employers, especially those in the restaurant and related service industries, describe one Lack Of Labour.
At a distribution company, a distributor of Anniehouser-Busch and other beers in Mequon, Ga., Delivery drivers are hard enough to find – and product demand is sufficiently strong – that drivers have to be deployed overtime and managers Has been asked to deploy. The truck, said chief executive Vin Stewart.
“When I talk to other people in the market, trying to figure out if this is something we’re doing or if other people are experiencing the same thing, all my conversations are the same , “Mr. Stewart said. “We can’t find people.”
With the economy reopening widely if many people are vaccinated, there are many things one can expect over the summer. The 85-man company already has 10 to 12 openings, and drivers are regularly offered to sign bonuses to move elsewhere.
“I think demand is going to increase, as they open concert venues and resorts,” Mr. Stewart said. “You’re going to see strong demand, and I’m not sure you’ll have the labor pool to service it.”
There are varying theories among the data pointing to a weak labor market and anecdotes of a strong report.
It may be that many workers are unable or unwilling to work until they see the health risks from coronovirus, or they spend their time caring for children or older or disabled family members. Have been. In fact, chief economist and an upshot contributor, Jed Coleco, calculated that 25 to 54 percent of the women working were down by 4.5 percentage points among mothers, compared to 3.4 percentage points without children.
This would mean that efforts to bring schools, day care centers and nursing homes back to full capacity would have a significant positive impact on the economy’s supply capacity – part of the Biden administration’s rationale for spending on those areas in its epidemic prevention plan Will insist.
Another possible reason for the labor shortage is that the influx of federal funds has led some people to work less. Mr. Stewart said five or six employees quit work in the days after the government sent $ 1,400 incentive checks, and business leaders have argued that expanded unemployment insurance benefits could prevent people from returning to the work force is.
But not supported by that theory The research The first round of extended benefits, which found that lack of job opportunities was a larger factor of unemployment than those living on unemployment benefits.
Growth in demand and supply disruptions of the economy also have important global dimensions. Many businesses rely on imports, including from countries that are far behind the United States in vaccinating their people, and in some cases facing new outbreaks.
In addition, backup in container ships at the port of Los Angeles and some other US ports, particularly on the West Coast, shows that the world trade system has continued to insist after the WhatsApp impact of last year’s shutdown.
James Manika, partner at the in-house research arms of the McKensey Global Institute, said, “There are companies that have changed the way they do their work before the epidemic and are more digitally capable, and the reopening is a big deal for them.” Is not. ” Of Vishal Consultancy. “The problem is that most companies are not, and those other companies found that they are highly dependent on their ecosystems and their financial chains.”
You cannot shut down the world economy, then turn it back on, and expect that everything will come back in general terms immediately. The question for 2021 is how slow the rebooting process is.