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Soaring prices, shortages, and inflation are the biggest stories making the headlines recently as the supply chain crisis continues to get worse by the day. As we already discussed inflation in previous videos, today we will be focusing on the widespread shortages the US is facing and how they are impacting American consumers in 2021. Even though we have been witnessing scarce supplies at the stores since the early stages of the health crisis, at the moment, our supply chains are experiencing more shortages than they did at any point during 2020. Last year, when toilet paper, hand sanitizer, and Clorox were completely wiped out from grocery shelves, supply shortfalls were thought to be temporary. But now, there are critical shortages across many sectors of the economy, and quite a few of those shortages will not be so temporary.
Just yesterday, Business Insider listed the most severe shortages we are going through at the moment, and according to the report, as the economy reopens American consumers will see several other items vanishing from the shelves. Amongst the most serious supply shortfalls is the ongoing computer-chip shortage, which has affected the production of cars, smartphones, appliances, and even dog-washing technology. Automakers have been hit the hardest by the semiconductor shortage as new cars feature navigation pannels that need up to 50 chips to properly run. The consulting firm Alix Partners estimated the automotive industry would lose $61 billion in revenue just this year due to the shortage, and industry experts are warning it could persist well into 2022.
The heated demand for vehicles and the vaccine rollout are also expected to contribute to further fuel shortages this summer as Americans resume their traveling plans. Gas prices have shot up 22.5% in March as compared to the same period last year, according to the US Bureau of Labor Statistics’ Consumer Price Index. The massive surge in gas prices started with the extreme Texas freeze, which shut down critical oil refineries in the state for weeks. The ravaging Texas storms also disrupted the plastics industry. As Insider’s Natasha Dailey reported, “the state is a key plastics exporter – and the storms made many plants, which are difficult to reactivate, press pause”.
Moreover, skyrocketing shipping costs are causing companies to push delivery dates back by months, and, consequently, several household goods including toilet paper, diapers, and tampons are also experiencing supply problems, and prices are jumping in face of the new round of shortages and shipping delays. The global shipping-container shortage, as well as delays at key ports in Southern California, have sparked a furniture shortage too. And considering that many US furniture stores use parts from China, customers are having to wait up to six months to receive their orders.
In the food industry, major fast-food chains, including KFC, Wingstop, and Buffalo Wild Wings are saying they are paying steep prices for scarce poultry and those increased costs are being passed on to consumers. Similarly, pork products, such as bacon and hot dogs, have seen supply dwindling since the onset of the health crisis when outbreaks were registered in at least 167 meat-processing plants forcing almost 40 plants to shut down. As people have started to prepare for the summer vacations and cookouts, analysts with Business Insider alerted demand will outstrip supply and these items will become incredibly hard to find.
All of the price increases companies are having to absorb are being quietly translated into higher consumer prices. These determinants are starting to alarm economists because if widespread shortages and price hikes are taking place during a so-called recovery, what is going to happen in our economy when things inevitably start to tanking? At the moment, it seems like most Americans remain unbothered as we’re experiencing the calm before the storm. Inflation is enabling price bubbles to run wild. For now, consumers are still numbed by stimulus money and slowly assimilating the effects of rising prices, while speculators are feeling like geniuses, profiting from the decay of our economy. Well folks, enjoy while it lasts, because an epic bubble bust will arrive sooner than people think, and then the real pain will begin.