Plastics & Semiconductor Shortages, Container Port Backlogs, the Texas Freeze Wreak Havoc on US Auto Manufacturing

Americans trying to buy a new vehicle will end up paying more.

By Wolf Richter for WOLF STREET.

The auto industry runs on far-flung supply chains and just-in-time inventories. Production is planned a long time in advance, and the whole industry is dependent on flawlessly operating supply chains. Cars are computers on wheels, with lots of plastic and thousands of semiconductors in each vehicle, controlling everything from the windows to all aspects of the entire powertrain, and of course the infotainment system. If a supplier runs out of just one kind of chip, they can’t build the component, and the vehicle cannot be assembled and the assembly plant has to shut down.

Then came the historic spike in demand for durable goods, powered by stimulus payments and the shift of consumer spending from services – flights, hotels, cruises, theaters, sports events, restaurants, and the like – to durable goods, such as appliances, laptops, video consoles, smartphones, computerized exercise equipment, and new vehicles. And they all have lots of semiconductors in them. And it had this effect:

Supply chain disruptions due to semiconductor shortages started dogging automakers and component makers late last year.

Then with impeccable timing in mid-February came the horrendous winter storm that rolled across a big part of the US and slammed into Texas, causing major blackouts for days, and other damage. Four semiconductor plants in Austin shut down; two of them, the Samsung plants, remain shut down to this day, pushing the chip shortage to the next level.

And now there are plastic shortages cropping up because petrochemical plants along the Gulf of Mexico shut down as a result of the Texas freeze, and many plants remain offline – thereby hitting the supply of plastics.

This came on top of the crippling turmoil in the shipping industry. Container ships are balling up near the ports along the West Coast for days and are not able to unload because ports are backlogged and are struggling with bottlenecks and other issues. With numerous container ships hung up, there is now a shortage of ships and containers in Asia for shipping goods to the US.

Automakers have announced plant shutdowns and production cuts because of the shortages of chips, components, and plastics, and damage to the assembly plants during the winter storm.

Honda said today that it would halt production next week at most of its five plants in the US and Canada. It blamed the chip shortages, supply chain issues – such as components hung up on container ships waiting off the coast – and the cold weather that resulted in broken pipes at some of its plants.

Toyota said today that it would halt production at assembly plants in North America. It blamed the shutdown of its plant in Kentucky on a shortage of petrochemicals. It also announced production cuts at the plant in Mexico that assembles the Tacoma pickup truck.

Volkswagen said this week that it lost production of about 100,000 cars worldwide due to the chip shortage, and that it is sitting a large backlog of unbuilt vehicles due to the chip shortages and the problems caused by the winter storm in Texas. It told the Wall Street Journal that it would try to catch up on its vehicle production in the second half of this year!

On Monday, GM shut down the plant that assembles the Cadillac CT4, Cadillac CT5, and Chevrolet Camaro. In February, it shut three plants in the US, Canada, and Mexico due to the chip shortage. The plant in Mexico will remain shut down through the end of March. The assembly plants in Fairfax, Kansas, and the CAMI plant in Ontario will remain shut down at least till mid-April.

These production cuts hit numerous models, but GM is trying to protect the production of its highly profitable full-size pickup trucks and SUVs, and those plants continue operating.

Ford [F] has by now shut down or cut production at half a dozen assembly plants. In early February, it said that it would cut production of its F-150 pickup truck, the bestselling vehicle in North America. This is an immensely profitable product for Ford. It cut production by eliminating entire shifts.

Tesla reportedly halted production of its Model 3 in February and early March for two weeks at its Fremont plant in California. A month earlier, Tesla had said that it was trying to mitigate the effects of the chip shortages.

This is happening amid hot demand for semiconductors in China where consumers, now largely barred from spending money on overseas travels, are, like Americans, splurging on durable goods, including cars. And this comes on top of efforts by Chinese companies to stockpile semiconductors in the era of trade restrictions.

For Americans trying to buy a new vehicle, this is going to be a mess over the next few months or perhaps for the remainder of the year and further out. These production cuts will be felt – and some are already being felt – on dealer lots, particularly with popular models.

Now new waves of stimulus payments are being sent out. Stimulus payments make perfect down-payments for new vehicles. With this money in the bank, people will feel empowered to go shopping. And dealers won’t feel any urge to make deals on popular models in short supply, knowing that consumers feel empowered to buy. And consumers will pay more.

Consumers paying more for new vehicles was already the case late last year, as documented by the largest dealer chain in the US, Auto Nation, which reported a huge jump in per-vehicle gross profit on soaring prices.

This type of inflation, triggered by bottlenecks and shortages, is what Fed Chair Jerome Powell refers to as “temporary” inflation – assuming that it won’t become embedded. And it comes on top of the regular inflation that is now working its way through the economy. Whatever it’s called, for Americans it means life is going to get more expensive.

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  136 comments for “Plastics & Semiconductor Shortages, Container Port Backlogs, the Texas Freeze Wreak Havoc on US Auto Manufacturing

  1. Memento mori says:

    We are reliving the mid 1960s right now.
    The situation is almost identical and we are pursuing exactly the same policies as then.
    Fed will get more than her inflation wish and will prove impotent to stop it.

    • Wisoot says:

      Only if you lie down and let them arrogate power. You do see that this is human manipulation dont you?

    • char says:

      The covid bill has to be paid and inflation is how you do it. The only semi-sane way

      • unkdesigns says:

        YOU HIT THE NAIL ON THE HEAD!!!!!

        • Harrold says:

          Strange how no one was talking about inflation last year when the $2.2 trillion CARES Act was passed or in 2017 when the $2.3 trillion Tax Cut and Jobs Act of 2017 was passed.

          I wonder why?

          What has changed in the past few months?

        • Wolf Richter says:

          Harrold,

          “What has changed in the past few months?”

          Inflation.

      • joe2 says:

        Biden will half-heartedly try to raise taxes, but everyone will find a dodge – we have not been watching congress persons, oligarchs, and corporations for nothing. And then back to monetization and inflation too high to even pretend to lie about.

        BTW, no matter what they say now, MMT relies on increasing taxes to mitigate inflation. But ivory tower central planners always think citizens are vegetables and not creative people focused on survival. Mansard roofs are my favorite.

        • char says:

          This is not a tax problem. It is a temporary problem that some groups get a lot of more income and some other group gets near zero income and there needs to be pumped for a short time a lot of money into the economy so the economy will still survive. You would get inflation in things the groups that get a lot more income even if you did nothing (and F the economy)

          BTW increasing taxes isn’t bad if that means a better life/economy. For the really powerful there are other ways to get more money than not paying taxes

      • Sailor says:

        Absolutely not.
        The 2008 Financial Crisis ignored moral hazard. What you are suggesting throws moral hazard out of a twenty storey window.
        Everyone who though offshoring production, JIT logistics, and complex supply chains were a good idea needs to go bust.
        And getting ordinary people who told you this would happen to pay for it through inflation is even more crazy.
        Furthermore, nothing has changed in government or bureaucracy. You are putting the people who created the mess in charge of fixing it, and of course they are just going to make it even worse.

        • Sierra7 says:

          Sailor:
          “The 2008 Financial Crisis ignored moral hazard.”
          Of course it did!
          And with that “hazard” sidelined, there can be any financial stabilization reconciliation from the destruction that period levied on the public. And, we continue to have generally the same individuals with the same economic philosophies in charge or our thinking which allays any inspiration of different thinking.
          The country has literally financially raped by the richest and the most knuckle dragging individuals, politicians and corporations that have appeared on the historical stage.
          As another commenter above alluded to the idea that “offshoring” great productive resources was not such a good idea, hoorah for him/her.
          What we have is the result of the self-edification of those who believe they have the right (and the power) to sway most of the globes inhabitants; I believe that that kind of thinking will snap back into their faces like a gigantic financial rubber band.
          What the future holds is real rising interest rates that are going to wring the dark speculative money out of the markets with the resultant plunge into the abyss. Without this needed “market correction” we cannot move forward in real economic/social terms.
          I can see historically why the FED was given birth; but it has been successfully (?) reshaped to only serve the monied class. It is a complete fraud now.
          May we see better days.

        • NBay says:

          Here’s some “moral hazard” for ya.

          You don’t make much as a molecular biologist studying evolution or zoology, but if you are working for a Drug Factory…yee-haw! Perhaps there should be a Hedonistic allowance for new drugs, as we are getting more exotic “luxury” drugs all the time. Seems I see a new one on TV every day. Lot of “drug engineers” and expensive equipment are on the job, and all laser focused on only one thing, giving us all an “modern and advanced health experience”! If that doesn’t count as hedonism, I don’t know what does.

        • NBay says:

          Oh yeah, make sure to hit “expand” to see what prestigious Universities these top molecular biologists all work at that enabled them to publish their stuff (hit on any name to see what else they “discovered”) at NIH. Even the university stuff now usually ends with “may have therapeutic value”.
          By the way, I saw on TV we are “rediscovering” Fibromyalgia which was a disputed diagnosis when it first came out. And also new meds for Tardive Dyskinesia which is caused by SSRIs that cure your mental “problems’.
          Enjoy our luxurious hedonistic modern MBA run medicine, and don’t bitch about price, buy stock in it and get rich with the rest of them.

        • char says:

          This is the good type of moral hazard. It is the “we got your back, we will support you so if something hits you without it being your fault it won’t destroy you.”

          JIT & complex supply chains are a good thing*

          *) Like everything in moderation

        • NBay says:

          A “Good moral Hazard”, eh? Like “alternate facts’?

          Well, I suppose phrases like that are a “type” of “everything in moderation”…..if you like confounding things.

          Wolf deleted the NIH published plan to further research old off patent drugs, change an atom or two, and re-patent them for extra profits, maybe because of the big drug company that all 15 or so “scientists” who collaborated on the “scientific paper” worked for.

          Like I’m trying to point out, it’s not really a science when MBAs run it. Curiosity vs Profits, ya know.

          I’m gonna quit preaching and let you idiots swallow whatever new miracle drugs that look good to ya, Rx or OTC. The poor Docs are trapped (or even complicit) in this MBA driven medical miracle of ours, that, as I said, might as well be treated as forced Hedonism….like Wolf’s car/truck chart. Will keep CPI-U down, anyway.

      • cas127 says:

        Might be reasonable if,

        1) DC wasn’t a hlgh debt-to-GDP, entitlements nightmare for years/decades before Covid *and*

        2) Inflation is the most dishonest, corrupting means of financing what claims to be a democratic government (vs a Business Roundtable/Political Class tin plate aristocracy)

        • char says:

          For covid you need to finance something like 20% of GDP, inflation is the only semi sane way.

      • Names says:

        How did we pay for the tax cut four years ago?

    • historicus says:

      Memento…
      More like the 70s, but agree.
      The Fed meeting is a joke. They cant do anything, thus they do nothing.

      Theft, plain and simple, dictated by the unelected.

      Inflation is a tax, promoted and “passed” by an unelected body upon a citizenry that has no representation on that body. That is “taxation without representation”.

      Additionally, minting, whether physical or digital, is a power of Congress, as is taxation. (Article I, sect 8 US Constitution)

      QUESTION THE FED

      The Fed ignores 2 of its 3 mandates under which it is allowed to operate.

      Stable prices (promoting an inflation rate that rips 22 to 28% off the dollar in ten years is a violation)

      Moderate long term interest rates (Record low yields are extreme, thus immoderate)

      QUESTION THE FED

      • historicus says:

        When does BITCOIN have a two day meeting to dictate to us?
        ha.

      • char says:

        Inflation is a tax for people who have more cash-equivalent than debt, but it is a subsidy for people who have more debt than cash. Most people have more debt than cash and most cash positive people have so little cash that it doesn’t matter. And almost all working companies that are not banks have much more debt than cash-equivalent.
        Problem for this site is that most readers are old and old people often have more cash-equivalent than debt.

        • Old school says:

          You are making trouble for the future when you are penalizing saving. Nobody saving equals consuming your ability to produce real stuff and after a few decades you start feeling it in loss of standard of living.

        • Sailor says:

          All of my siblings, and myself, had more cash-equivalent than debt before we were 30. If that meant living in the tiniest shelter and no luxuries, we did so. If that meant changing careers as markets changed, working two shifts, or moving across the country or to another country, we did so.
          Why should we pay for people who were not as careful as ourselves?

        • sdb says:

          Perfect !!

        • Felix_47 says:

          Good point. We came to the US out of the wreckage of Germany and the parents, now passed, lived through the Weimar era of inflation which they say was triggered to discount the war debt to France. The parents refused to have a mortgage, worked like dogs, saved and invested and hired many Americans. Their kids (me included) remember the war years and did the same thing. So the notion of saving is hard to break but if this continues I am going to have to buy a house in Malibu where mortgages are nonrecourse. Then when it crashes we can send jingle mail.

        • cas127 says:

          “Most people have more debt than cash ”

          You behave as if that is the result of a lightning strike, not individual agency or corporate decision-making.

          And…btw…savers have *already* been ZIRP’ed for 20 MF’ing years…yet the debt addicts are worse off than ever.

          It has nothing to do with young or old (I’m in the middle)…80% of the time it has to do with the careful vs. the careless.

          Until the final disaster, when the latter finally exhaust the former’s resources.

        • char says:

          @old school

          True, it will create trouble in the future but how would you solve the financing problem? It is simply to big and defused to solve it in another way.

          @Sailor

          Did you rent, had a mortgage? Had you real money or did you belong to does not matter (everybody with less than a year income of a good job belongs certainly to this)

          @cas127

          People don’t decide who their parents are so it is not a question of agency. Say you have saved one year of income and you are 40 (that is good if you don’t inherent and have kids) then you can spend the next 40 years 2.5% more than your income which isn’t exactly much. Savings is not important, income is and that depends much more on what the economy is doing

      • Mark says:

        Question? Holy moly- in any fair world, we’d be talking about major jail time for Bernanke, Yellen and Powell – and even for Greenspan if we could.

        America’s passive serfs give the ultra rich a green light to pocket even the crumbs on the floor now.

        George Carlin is turning in his grave

      • joe2 says:

        QUESTION THE FED
        Hell, abolish the FED and go back to US issued currency like President Kennedy started to do but could not complete.

        • Tom Jones says:

          What’s your source on that…would, love to read it.

        • joe2 says:

          Tom: Executive Order 11110 was issued by U.S. President John F. Kennedy on June 4, 1963.

          “) The authority vested in the President by paragraph (b) of section 43 of the Act of May 12, 1933, as amended (31 U.S.C. 821 (b)), to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates, to prescribe the denominations of such silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption,”

          There are 2 views on this. 1) Kennedy was trying to go back to a US issued currency and 2) this was a temporary expedient in transition to a complete Federal Reserve Note currency system.

          Take your pick. There’s lot’s of references and comments on the internet. Like any politically charged historical references these days, you have to do a little analysis and evaluation. See what conclusion you come to.

  2. Depth Charge says:

    I suppose this is one reason why supply is limited on certain vehicles at the local dealerships. Talking to a local RV dealership they said that some of the manufacturers were having a hard time getting molded plastic sinks and toilets and things from China. So, it’s not all a demand side issue, it’s the supply side as well. I guess it’s time to go to sleep and not buy any durable goods for the foreseeable future since I shop on price alone.

  3. NARmageddon says:

    >> Cars are computers on wheels, with lots of plastic and thousands of semiconductors in each vehicle,

    Millions of transistors total in those semiconductor chips, YES. Thousands of semiconductors (chips and/or discrete semiconductor components), definitely NO. Almost certain it would be less than a hundred separate components.

    Not a big deal, but just to keep perspective.

    • Wolf Richter says:

      NARmageddon,

      You need to take a look at the innards of new vehicles. You’re a tech-inspired guy. You’ll have fun with this.

      There are chips in each wheel!! (part of the tire pressure monitoring system). And wheels are the simplest part of the car. Then have a look at the infotainment system. Chips everywhere. Every gauge is electronic with a screen. There is a computer screen and myriad of functions in the center. There are more chips in the steering wheel than you can count (you control many of the functions of the infotainment system from the steering wheel). Your entire dash is driven by chips. And then the numerous computers that manage the power train, the 10-speed transmission, the emissions system, the cooling system, the fuel system, braking system (antilock), 10 airbags, the communication system, the 16-way power seats, the trunk lid, the electronic entry system (the little numeric push button thingy by the door), the electronic key fob that communicates with the car by radio waves, the door lock mechanisms, the parking assist, the hill-start assist, the backup camera, the lighting system with its switches, sensors, and LEDs, the adaptive cruise control with the radar (?) to respond to the traffic around you, the electric handbrake, the push button to start the car, the dial for the gear selection, the fly-by-wire gas pedal, the rain sensors that turn on the windshield wipers when it starts to drizzle, the sensors that turn on the headlights when it gets dark….

      Just scratching the surface here.

      • historicus says:

        and I believe we make only 12% of the chips.
        Our reliance on a China that really doesnt like us will be manifest.
        And who is a threat to us, and the position we are in will be evident even to Biden supporters. And Trump will be proven correct again, ala the border.

        • cas127 says:

          Even in the early days, with a 100% aggressively tongue bathing (albeit dying) MSM, Biden is really going to take a hit on unwinding the Stay-in-Mexico system (one of the extremely few things that have even semi worked in 35 years of illegal immigration disaster).

          Biden has wisely hunkered/bunkered down and stuck to DC knitting for the most part.

          But unwinding Stay In Mexico was a huge unforced error for himself and the country.

      • topcat says:

        True, but NARmageddon is also right in saying that there are a limited number of major suppliers of each class of chips (micro processors, power devices, passive compoments) and the manufacturers of infotainment systems try to limit the number of suppliers and hence the number oif different chips. No one wants to develop software for 3 or 4 different microprocessors in parallel.

      • doug says:

        From what I have read, the chips for automotive use are cheaper/less profitable than chips for say phones/gaming consoles. Thus automotive chips are last in line to be mfg’d. Quite the logjam for whatever reason. I wonder if it will be resolved as fast as they predict?

        • topcat says:

          Automotive spec is usually 125°C ambient or even 150°C ambient which is much much higher than standard spec (85°) chips for phones or games and they are hence also much more expensive. They are however harder and more expensive to manufacture – also the volumes are nowhere near as high as phones and games so all in all automotive is not great for the suppliers.

        • cas127 says:

          I’ve read the same thing…auto chips last in line.

          But I also read the auto chip kink had peaked back in January.

          Maybe we are only seeing the follow on effects of a crisis that has come and gone.

      • joe2 says:

        Old cars worked just as well as the new chip infested pigs. Would you trade your fancy Benz for a Shelby Cobra? I would of in a heartbeat but I got rid of it after the chip in the key failed – $300.
        Did someone get a heart attack from manually rolling up their windows? Or a bad back from leaning down to check tire pressure? Just more stuff to fail. I had to have the wheel tire pressure sensors on the Lexus replaced after they failed. Tire pressure was fine.
        True, the mechanics and body have improved and do not rust like they used to, but they had to find some way to inflate the prices and make up for the lost repair income.

        • Harrold says:

          Horses work just as fine as cars and you only need to feed them hay and water. No need for gas, oil, transmission fluid, any of the fancy stuff.

          Get two of them and you will soon have an endless supply of horses and never need to buy another one.

        • joe2 says:

          Harrold: It’s illegal to keep horses where I live. Maybe a dog cart? But that’s probably illegal on the road too.

        • Lawefa says:

          Maybe those Mennonites and Amish folks have something here. They don’t seem to be impacted by all of this. Wonder if they are accepting applications.

        • char says:

          @Joe

          In 20 years and probably sooner it will be illegal to drive an ICE in the city, just as horses are now.

      • ft says:

        The only electronics-free control I can find on my 2020 car is the hood release.

        • Wolf Richter says:

          😂 Never thought of that.

          Hey, auto engineers out there, make that hood release electronic and software controlled!

        • Dan Romig says:

          One thing that surprised me, and disappointed me a bit, was discovering that my 2016 M4 does not have a dipstick; although when I’m driving it that might be debatable.

          To open the hood, you need to pull the hood release twice & it has latches securing it from each side – not just one in the middle.

        • Wolf Richter says:

          Dan Romig,

          Why would you need a dip stick when the car has a sensor system that tells you when to change the oil?

          My 2006 Infiniti G35 still had a dip stick, but it was shaped like a run-over baby rattle snake and you had to thread through between all kinds of engine parts, tubes, hoses, heat shield, exhaust manifold, and what not, and target the tiny hole way down in that tangle. It was really hard to use. Thank god our current vehicle has a system in the dash that tells me when to change the oil.

        • Anthony A. says:

          Wolf, most owners don’t know what’s under the hood, so why bother!

        • Dan Romig says:

          Wolf,

          You make a good point about needing a dipstick when the car has a system that tells you where the oil level is at and when it was last changed.

          Forty-two years of owning cars has me programmed to want to check not only the level of oil on the dipstick, but also the appearance of the oil as it changes color from when just replaced to needing a change.

          “You can’t teach an old dog new tricks.” Woof, woof.

        • Dan Romig says:

          Just got an email from BMW promoting the new all electric i4. No dipstick on this one!

  4. Tom S. says:

    So we invest in more semiconductor manufacturers here and increase supply until car prices flatten out. Then give our more stimmy to the taxpayers to buy more cars. It’s foolproof. Like a perpetual motion machine. The have-nots get their new cars and the haves get their new private jets and all is right in the world.

    • timbers says:

      Those jobs are gone forever and can never come back. Better to look at giving tax subsidies to US techs that close US factories and open chip plants in Bangladesh at 0.50/hr.

      We need to move on and be constructive by thinking of ways we CAN improve the lives of Americans…like giving Congressman free automobiles of their choice along with their free socialist medical care that they tell us peasants is bad and we can’t have.

  5. Depth Charge says:

    “…Cars are computers on wheels, with lots of plastic and thousands of semiconductors in each vehicle…”

    I have never been so thankful to have my old diesel truck as I am now. It has a mechanical injection pump, and will run without electronics as long as you can get it started. Once running, short of a fuel issue it will never stop, even if the battery and alternator go out.

    A neighbor has a brand new 2020. It has been in the shop more times since new than my old truck has in its 24 years of life. And they have to take it back in. It has some electrical gremlin which is causing the batteries to go dead and the whole truck to shut down. It’s a nightmare, and the dealer can’t figure it out.

    • Anthony A. says:

      D.C. – Dealership mechanics are not good at troubleshooting problems. They are trained to plug the computer into the OBD2 ports and run diagnostic then change out indicated parts from the fault tree. But not all test programs can find intermittent issues, especially electrical draws after shutdown of the vehicle. (I have been there)

      That’s why these vehicles can be headaches with all the low amperage electronics. (and mechanics (i.e. “parts changers”) that don’t know how to troubleshoot issues the diagnostic software can’t locate)

      • Sailor says:

        You can find any number of videos on youtube where the dealership says ‘replace’, and the guy takes the offending part apart and fixes it in 20 minutes, usually with a $2 sub-part.
        I have the perfect troubleshooting method – I have the exact same year and model truck as my mechanic, as do three others in our area. Troubleshooting takes him about a minute, tops, often only 10 seconds. What really helps him is that all of us, being mechanically-minded, will give him a detailed list of symptoms. Another advantage of a local mechanic over the dealership one is that he can diagnose the best way to fix it – aftermarket part, used part, factory part (maybe on a different replacement schedule to the official one), or sometimes even just ignore it.

      • cas127 says:

        Thank you, this is one of the clearest and most concise explanations of the auto repair/auto design process (and its expensive dysfunctions).

        One question – Any insight into the suitability/sufficiency of the OBD2 system for exposing pending problems with *used* cars?

        The future of America is impoverishment, which means making do with used products.

        But used car purchases have always been a minefield.

        Can OBD2 diagnostics help in a way civilians are unaware of?

        • Anthony A. says:

          Cas127, your question:

          “One question – Any insight into the suitability/sufficiency of the OBD2 system for exposing pending problems with *used* cars?”

          With a used car, a seller (private or a dealer) can run a scan and see what malfunction codes are present, or potentially there (pending). You can buy a very good scanner for under $100 these days which even checks air bag, transmission, certain suspension (wheel speed indicators – ABS faults) along with all emission functions (Cat Converter, O2 sensors, MAF and MAP sensors, etc).

          Most fault codes can be deleted (Check engine light, and other indicators, turned off) with the $100 scanner on a *temporary basis*. What I mean by temporary is that the computer (ECU) has to see a “driving cycle” run to verify that certain fault codes were deleted and the necessary repair was done. If the driving cycle completes and the repair was not done, the code is thrown again. These cycles are called “readiness” cycles and if they are not complete, the code will be thrown as I indicated. Also, the scanner will show a reading for the readiness monitor as being INC (incomplete).

          If you show up at a test station for a scheduled inspection and all the readiness monitors are not showing OK (complete), you will not pass the inspection.

          If a repair was done correctly AND the driving cycle was complete, the scanner will show no codes present AND the readiness monitor is cleared (will show as OK).

          As far as I know, the ability to clear (delete) a malfunction code and also close out the readiness cycle WITHOUT a full completed driving cycle can only be done by a dealer who has the correct OBD2 software. And I believe only licensed dealers can have that software.

          In most cases, a “driving cycle” of a OBD2 readiness monitor can be as much as a 100 miles of driving under various roads and traffic conditions.

          Auto manufacturers installed these readiness driving cycle abilities to keep people from just clearing a malfunction code within a short time of having the car brought in for emission testing. Most testing states require that all emission parameters are within tolerance.

          Believe it or not, a fault code for an airbag system failure is NOT a reason to fail an inspection in some states. Crazy. Many states incorporate a safety inspection along with an emission test.

          Hope this helps answer your question.

      • Depth Charge says:

        Anthony –

        That’s why dealerships have a direct line to engineers of the vehicles these day, because they have to get them involved in order to repair many of the problems. The vehicles are so complex that you have to delve into the design aspect to even begin to understand cause and effect, and that is WAYYYY beyond the pay grade of today’s parts changers. Engineers will even fly to dealerships to assist.

        • Anthony A. says:

          D.C., yes, true, I have seen that happen. They absolutely hate to do this, but some problems are really over the heads of the shop guys. And some of this will turn onto a full recall if the problem is with a bunch of the same year and model of cars.

  6. Pablo says:

    Looks like the uberpreppers are having the last laugh. Other than new vehicles, when do these shortages hit agricultural machine production, spare parts, consumer goods and other durables?

    Option A: You buy just what you need and wait for things to go on sale to mitigate the soaring inflation, hoping that you can get the item when you actually want it, or

    Option B: You bought absolutely everything you would need, except dairy, and have enough to supply friends, family and neighbors, in case of emergencies or supply line interruptions for a long period.

    • Wolf Richter says:

      Food consumption is limited ultimately by how much food people can eat. Sure there is some hording and speculation, but in the end, food has to be eaten, and that limits demand. But production can outrun this demand (this is why ag commodity prices collapse periodically).

  7. GotCollateral says:

    What is omitted: (higher “per vehicle profit margin” * less volume) still equals less money for the corps from sales… Retail Sales MoM feb -3.0%, Core -2.7% tells it all…

    What will last longer?:

    a) Supply side shortages leading to consumer price hikes

    b) The debt bailouts used to finance a)

    • Depth Charge says:

      Yeah, and fewer cars sold = fewer salespeople at the dealership selling cars = more layoffs. This whole price inflation in cars thing is not sustainable at all. It’s masked by debt.

      • dr_doomz says:

        Depth Charge:

        “Yeah, and fewer cars sold = fewer salespeople at the dealership selling cars = more layoffs. This whole price inflation in cars thing is not sustainable at all. It’s masked by debt.”

        Wrong. They will file for Covid UI benefits and end up making more for not working. It’s coded into law. Stop with the deflation narrative.

        • Petunia says:

          Unemployment benefits are at best low wage income. Nobody is relying on it as long term income. The real loss of jobs is what is fueling deflation. If people had jobs, they wouldn’t need extended unemployment, rent and mortgage moratoriums.

          Have you been following the debacle nationwide in paying out these benefits. The criminals, mostly foreign, are the ones getting rich off of unemployment. While real jobless people are still waiting for their benefits.

        • 91B20 1stCav (AUS) says:

          Petunia- (updating) Woody Guthrie’s ‘Pretty Boy Floyd’:

          “…as you travel through this life, you’ll meet lots of funny men, some rob you with a six-gun, and some with a fountain pen (or keyboard)…”.

          may we all find a better day.

        • dr_doomz says:

          @Petunia

          “Unemployment benefits are at best low wage income.”

          Let’s do some basic math:

          450 + 300 = 750

          Work on the side = 1250

          750 + 1250 = 2000 PER WEEK, 8680 PER MONTH

          X 3 working household members: 312,480 per year (virtually tax free, equivalent of $500K gross income perhaps in Cali), a 60% increase in income. Not including child tax credits, etc.

          Now add this:

          You don’t have to pay rent or your mortgage.

          Go back and look at the chart of durable goods.

          Deflationary?

          “Have you been following the debacle nationwide in paying out these benefits. The criminals, mostly foreign, are the ones getting rich off of unemployment.”

          I’m not an armchair economist. My feet are on main street. Everyone is defrauding the system, the little guy and the big guy (PPP fraud). The fraud is sanctioned by the government. We have virtually 0% unemployment, soaring incomes, in a supply shocked economy.

          Deflation?

          “While real jobless people are still waiting for their benefits.”

          Sure.

  8. Wisoot says:

    Callef “temporary inflation” otherwise known as planetary blackmail by the chip patent owner. This being the second sweat program. First being join Blackstone Aladin with snowflake to choke off planetary money supply by price fixing. The baddie always gets caught in the end of a James Bond movie due to hubris carelessness and weakness exploitation.

  9. WES says:

    The Texas freeze has disrupted resin supplies to auto parts suppliers forcing more production delays per my brother working at one of the big 3 auto makers.

    • Mark says:

      I think I read the that the incredible lumber price increases are actually caused by the same resin shortage, no such much by actual supply of wood to process.

    • Petunia says:

      The Texas freeze has also shutdown the Samsung fabricator that was to open/expand chip production there.

  10. Paulo says:

    It’s not just that these semi conductors are MIA for new automobiles, it is also sourcing parts down the road. When designs change, the manufacturing runs are finished and good luck trying to source parts. It’s not like they warehouse extras, forever. Complex electronics are not made to be repaired, they are simply swapped out and replaced when systems fail. I have several very old Motorola and Kenwood amateur radios. Their value has climbed unbelievably in the last few years because they can be repaired. They are also robust. Newer radios are simply thrown away when they quit.

    And there is also design idiocy. I was amazed to read that many 4X4s actually run their front drive shafts through the oil pan. And everything works by sending units, ‘drive by wire’. Even horns. There is a whole generation of people that do not know how to check tire inflation, or understand what it is? The capper for me was the young lady who borrowed her mom’s Jeep. She came in the house to ask how to roll up the windows? The jeep had crank windows. She had never see a manual window before.

    Complexity does not breed resilience. This article demonstrates this to a tee. Think if there was ever an EMP ? Pandemic? Weather event? War? :-) It happens.

    • WES says:

      Yes, you are really up Schitts Creek when the micro-chip in your paddle doesn’t work!

      • Dan Romig says:

        Yeah, and make sure that the front and rear derailleurs on your bicycle have their batteries charged up or you’ll be riding in only one gear!

        Adding to Wolf’s point about cars being computers on wheels, I enjoy looking at the reviews of new performance motorbikes, and one of the main points of the analysis is how do the electronic management systems work.

        Active rear dampers & front forks are the new frontier for ride control. My two year old bike has manually adjustable compression & rebound damping front and rear, but I wonder if I should have spent a few thousand more and got an active system?

        Funny thing is, after trying a few different settings to find a nice balance between ride comfort & handling, I went back to the recommended standard settings.

        • 91B20 1stCav (AUS) says:

          DanR-glad that there has been enough retro-applicable-by-owner (should one take on the additional pleasures of constant self-improvement of their engineering/mechanicking chops) moto-suspension/frame/tire knowledge developed in my lifetime that keep my small collection of previous-century bikes fun and real-road quick (real-road horsepower availability exceeding any usable need for most riders well before the turn of the century) and affordable.

          That said, have always been amazed at the instant disregard of the combined talents of OEM engineers by many proud new machine owners (who are shy of the necessary setup chops), resulting in many tears before returning the machine to more-or-less well-functioning original spec.

          Ride safe and happy trails.

          and may we all find a better day.

    • California Bob says:

      I’m wondering if all this will cause some manufacturers to rethink their supply chain philosophy. JIT (‘Just-In-Time’) inventory non-management works a treat with no supply chain disruptions. Of course, keeping massive inventory isn’t efficient either. Perhaps a ‘hybrid’–everyone wants a ‘hybrid’ according, at least, to an IBM commercial–with JIT but ‘just right’ on-hand inventory to buffer an interruption.

      It’s a safe bet this won’t be the last pandemic we endure, as we encroach on nature even more. We now have a temporal baseline to work with: Figure minimum one year to get through the 5 stages of grief and get vaccines perfected (we’ll likely never perfect distribution, at least not without a NHS), so have a year’s worth of crucial components stashed; if you don’t need them you can gouge the hell out of those that do.

      • topcat says:

        It would require a JFK “Moon Landing” type govt. sponsored project in order to get supply chains back in the USA. The skilled personnel and the companies are no longer there. In Germany, Japan and Switzerland there are thousands of small-medium size engineering companies that supply the large OEM’s line VW, Bayer, Nestle etc. THis infrastructure no longer exists in the USA or the UK and it isn’t coming back without a major governmental indutrial policy.

        • 91B20 1stCav (AUS) says:

          topcat-so well-said. Never fail to be flabbergasted by the number of my fellow citizens who honestly believe that every aspect of the old ‘made in the USA’ supply chains have just been quietly asleep for 25+ years and only require an official announcement to reawaken at full capacity (cue Monty Python’s ‘Dead Parrot/Pet Shop’ skit…).

          may we all find a better day.

      • doug says:

        My experience with JIT was it meant forcing the warehouse space on suppliers. There was always as much inventory, it was just on different books.

      • Stonedwino says:

        Just in time inventory is very clearly proven to be a massive failure & a huge drawback to timely production. I was skeptical of the long term viability of just in time inventory when it was being taught to me in college back in the mid 1980’s. I always thought, what if?! Well, the what is happened…

    • Engin-ear says:

      – “And there is also design idiocy. “…

      True, but this is totally rational in the current way of thinking where the *wasting* of not-renewable resources is an acceptable price in the social and economic competition.

      I suspect that this situation will auto-regulate itself: the wasting will stop when there is nothing more left to waste.

      • 91B20 1stCav (AUS) says:

        Engine-ear: the never-ending tragedy of the commons…(“…who knew???!!!…).

        may we all find a better day.

    • dr_doomz says:

      Paulo:

      “When designs change, the manufacturing runs are finished and good luck trying to source parts. ”

      Excellent call.

      • Anthony A. says:

        Yes, my friend can’t get parts for his 1994 Cadillac. Still runs though, just can’t find interior parts or parts for the air suspension.

        • roddy6667 says:

          Go to the websites of larger local junkyards (used auto parts). They are connected by a computer network to all the larger junkyards nationwide. You can find almost anything.

        • VintageVNvet says:

          There are some small custom suspension parts manufacturers in SoCal that may be able to make what your friend needs AA.
          King is one name you can look up on net, and I hear the folks there are very helpful…
          Likely others that cater to the off road community from what I have been told recently.

      • VintageVNvet says:

        IIRC, USA auto manufacturers used to be required to make available repair parts for their products for 20 years after the end of any model.
        Perhaps someone on here can tell us if that is still law or not.

        Thanks,

    • Lisa_Hooker says:

      Not to worry Paulo, the kids will just book more hours with their therapist.

  11. Curious says:

    The fed seems to be betting on less inflation down the road, or even deflation. Why else would it pre-announce it will be keeping rates near zero through 2023?

    If it expected continued inflation, I believe it would be raising rates. The stock market bubble with its current P/E ratio of over 35, is about double the historical average. Added with sky-high margins, buyers are not really investing, but gambling. The house always wins in the end.

    • YuShan says:

      It is actually much worse than it looks, because there are multiple layers of leverage in play, stacked on top of each other.

      For example, not only is the market insanely expensive by historical standards, the companies themselves are also more leveraged than ever (record corporate debt). So these high P/E ratios are actually lower than they would have been with more prudent balance sheets.

      Then the next layer is investors being extremely leveraged. See for example Wolf’s previous blog post.

      Etc. It is really a house of cards, based on the assumption that central banks can and will backstop the market forever.

    • historicus says:

      “Why else would it pre-announce it will be keeping rates near zero through 2023?”

      You assume they act in best interests and in line with their mandates of stable prices and moderate long rates. They do not.

      Powell is controlling the “perception”. The inflation that just occurred and is in the pipeline yet to be fully measured….Grains, Lumber, Copper, Gas and Oil…..is all being explained away….a spike, a temporary blip.
      They hope.
      Lagarde and Powell both said the same thing….and both are in the same boat. They say they will “see through this spike”. ie they will ignore what is blatantly REAL.
      Sadly, Congress, who one would think is responsible for the Fed to promote STABLE prices enjoys the free borrowing costs for their vote buying antics and mega bills.
      Quite a flaw in the system. And as everyone from Socrates to DeToqueville noted, Democracy fails when the population learns they can vote themselves money from the Treasury (via the Fed). Fiscal Failure.

      • char says:

        FED also looks at employment so not only at low inflation.

        Covid costs so much money, they hope inflation will pay it. I have my doubts but people can hope.

    • Old school says:

      I think at some time in the 20 th century maybe in high inflation 80’s PE dropped to 6.9. That’s a lot of air beneath our wings.

  12. YuShan says:

    The imbalance is also simply because the amount of “stimulus” thrown into the economy is much higher than the actual income loss due to Covid. Even without a pandemic causing disruption in supply chains you would have had shortages.

  13. David Hall says:

    Plastics are made from natural gas liquids. A ban on drilling for oil and gas on Federal lands might have a negative effect on ethylene production. Ethane gas is a feedstock for plastics production.

    China is building semiconductor chip foundry capacity to protect its supply chains from US sanctions related to the Chinese theft of US intellectual property as in patent and copyright infringement. It was easier for them to hack computers to steal research and development than produce their own R&D.

  14. lisa2020 says:

    Great dose of the real problems when network design is NOT fulfilling basic functional real goals. Presently what a few guys thought was the function of the network is definitely in phase one of PROVING how wrong they were and are. I doubt very much if some top dogs that are running a lot of companies into the ground have ever really read chapter one of Integrated Computer Network Systems by Frank Welch. I just did a reread of that little chapter, which I review periodically, since it’s my bible, This little sentence is a real pretty one: “Labor investment does not end with network installation; a network requires maintenance.”

    In other words, A lot of real jerks don’t have a clue as to what maintenance really is at all. They also don’t have a clue as to what work is either. It remains to be seen if I have any idea about what I am writing about either!

    1.1 Enterprise networks
    RE; Reliability : “You do NOT allow yourself to become dependent on a tool that is only available on occasion.”

    In other words, you gotta know what tool you really need to do anything at all.

  15. historicus says:

    Yep.
    And the ones that warned of this, the ones that warned of massive Trade imbalances collapsing our manufacturing, will be proven correct, sadly.
    And those who, from their ivory towers, explained that trade deficits dont matter because the dollars must return, will be proven gullible idiots.
    For power, ownership, and control also changes with who controls the currency.
    Real shortages, not these inconvenient container issues, real shortages are around the corner.

  16. historicus says:

    lisa
    “You do NOT allow yourself to become dependent….”
    and our nation has allowed the condition.
    Trade deficits dont matter mantra, foreign controlled lobbyists, and foreign students packed into our technological universities via grants and special considerations….
    we have plotted our own demise.

  17. Al Loco says:

    I buy the chip shortage due to the massive fleet of container ships anchored on our coast do to “COVID”. I dont buy the Texas storm causing the plastic shortage. Petrochemical feedstocks have been in short supply since late 2020. We had a European supplier declare force majeure in January due to fully depleted polypropolene supplies. This was well before the storm and how much plastic molding are we actually doing here in the US? Silicone has also been next to impossible to get.

    Price increases are killing everyone. Many come after we cut a PO. In the past these were often surcharges with the hope they will go away when things “normalize”. Not a single surcharge this round.

    • Petunia says:

      China used to buy a lot of recyclable plastics, especially from Canada. I heard they stopped buying from Canada about 2 years ago, and they probably stopped buying from us as well over the tariff issues. I don’t think we actually recycle most of the stuff we throw out.

      • char says:

        “Recyclable plastic”

        Euphemism for waste

        China closed the border for plastic waste a few years before the tariffs and not only for the US but globally

  18. Al Loco says:

    All you need is resources and intelligence. We fortunately still have both. Just like a soldier is willing to reduce his standard of living to fight for his country, we would all have to make sacrifices. My fear is there wouldn’t be a war, we would just unlock the door and let them in.

    • Mark says:

      “All you need is resources and intelligence. We fortunately still have both.”

      I don’t agree. Expecting that from a generation that can’t put air in their tires, and call maintenance to change a light bulb. ?

  19. Random Guy 62 says:

    Price increases and shortages are starting to mean we are missing ship dates, which were previously insulated by safety stock levels. Steel shipments are delayed by weeks. Just about everything seems to be running behind, though.

    Rumor today is that freightliner is suspending production for 90 days because of shortages. That won’t help matters for us.

    Demand has been historically strong for the past three months but supplies are BARELY keeping pace.

  20. Gerry says:

    Cars are now wired mini-computers. These chips are wired to a network, a network only as strong as its weakest link. Miss a required IC or two and the car can’t be finished. When Superstorm Sandy hit New York in 2012, it caused flooding that immersed tens of thousands of cars in salt water. That salt water corroded the wiring inside those cars, causing these cars’ electronics to malfunction and turn many cars into total insurance write-offs; thousands of flooded cars got towed to a massive parking lot in Calverton, Long Island for storage before eventual disposal. The car wiring corroded by salt water had been used by the car’s CAN [Controller Area Network] bus system. CAN is the physical wiring, chips and software that controls the car’s operation. Bus is simply a way to get electronic components to talk to each other. “CAN is a multi-master serial bus standard for connecting Electronic Control Units [ECUs].” CAN bus is a set of 2 electrical wires in the car network where information can be sent to and from ECUs. For instance, on “Mercedes cars, CAN wiring has been incorporated since 1992 to allow the sharing of information that is used for the engine, transmission, airbag, anti-lock brakes and suspension control systems.”

  21. Ron says:

    Everything will shut down when electric system goes down Texas was just a trail run biggest bs in existence wind turbines work in every cold climate in world but Texas people are gullibale keep feeding them shit if they will eAt it what happened to independent and strong willed citizens of this country wolf got any condos in spain

  22. Say It Aint So says:

    What’s more important…a Car or a Phone? 10 years from now you will be reading about the great collusion scandal of the chipmakers…

  23. OutWest says:

    Let’s see. Texas removes itself from the US power grid and refuses to prepare its energy sector for a rather average (every 15 year) winter storm. Now plants across the US are shutting down as a result.

    As they say, follow the money….

    So who is making the big money here?

    • Petunia says:

      Texas was on its way to becoming a powerhouse producer before the storm. Now that the grid has shown its weaknesses many projects are delayed or have been put on hold.

      It looks like there were economic/political actors making decisions there to stop the wave of productivity. It’s the same bunch that wants to flood the country with immigration, eliminate energy production, and increase censorship.

    • Turtle says:

      It was a 100 year weather event, actually.

      • Gerry says:

        More a geoengineering moment than anything else, to create an instant Enron-type situation that loots Texas ratepayers of billions of dollars.

      • Depth Charge says:

        I remember living through 3 “100 year floods” in the span of 10 years.

        • Turtle says:

          These things don’t run on a schedule.

        • Depth Charge says:

          Nor is there any such thing as a “100 year flood.” The new FEMA flood maps and subsequent insurance premiums will attest to that.

      • Anthony A. says:

        We had a worse one in 1989. Many more frozen homes and a week of frigid cold. I was here, I Houston when that happened.

  24. Maybe some people can’t get what they want, but there will be no shortage of cars. This is also probably a win win for the automakers. GM furloughs workers? Shut down the plants and saves money. While they can raise the price, (or dealers can raise prices) of their inventory. Also probably good for Tesla which has an existing backlog when other carmakers do the same. Wonder if the zero APR is finished?

    • Old school says:

      Price mechanism is good for economy to rapidly heal itself as high profit margins get people to do nearly impossible things. Been there a time or two when companies can’t hand out money fast enough to get good employees to work their butts off to grab the golden ring.

  25. Cynical Engineer says:

    The auto industry has nobody but themselves to blame for the chip shortage.

    When auto sales collapsed at the beginning of the epidemic, the auto manufacturers cut production (very rational), but also cancelled their chip orders. Most of the auto industry suppliers are captive and just have to suck it up when this happens. The semiconductor fabs had no problem finding other customers to take over the manufacturing capacity the auto industry cut loose.

    After sales rebounded, and the auto industry came back to the semiconductor guys and announced “We’ve changed our minds, we want all those chips right away”, the fabs told them to “get in line.”

    The auto industry has been ruthless about bargaining down costs, and with the shoe on the other foot, the auto manufacturers will either have to pay a LOT more for their chips, sign ironclad purchase commitments or learn to do without.

    • Tom Pfotzer says:

      Cynical Engineer: your report seems quite credible to me. I bet this is a factor in the re-start of production snafus.

      With respect to container shortages, remember that chips take up very little space. A container can hold a million of them, and they’re high-value. The people that ship chips can afford to pay a lot for shipping (e.g. getting to the front of the shipment-queue).

      Just this once, I believe Powell and Yellen when they say “the shortages and the shortage-related inflation are temporary”. I think they are just that: temporary.

      A less-temporary fact of economic life is the reduction of household income. I saw some stats today about how Americans will spend their next stim-check. The numbers don’t add to 100 percent because people can spend the money on multiple things, but here’s the top-5 allocations of that money by households:

      Savings – 34%
      Food – 30%
      Housing – 22%
      Debt reduction – 18%
      Home improvement – 11%

      They are spending it on running their household and savings for emergencies.

      Why is this relevant? Because HHs are just not making it. When you get a windfall and have to spend it on food, rent, and debt reduction…you’re not “wealthy”. You’re just keeping it glued together for next week.

      With that as backdrop – hh incomes not providing for “baseline expected” std of living, gov’t has to funnel stim-money to HH to keep demand up (cause they ain’t making it on paychex) – it’s approaching game-over, guys.

      So, we’re not going to see rates go up by much. That can’t happen; too much debt out there at all levels. Fed will (and absolutely must) prevent that any any cost. Balance sheet to Pluto. Can’t make payments if cost of money increases.

      We’re not going to see incomes go up, either. Globalization, automation, et. al.

      That means more stims. It’s the last move.

      Next question: what do we do when the stims can’t be supplied any longer? How many years before we’re there?

      Please supply Plan B, as I seem to be too dim to identify it.

      Asking sincerely.

      • nodecentrepublicansleft says:

        Hey Tom! Some “citizens” did realize they could “vote” money to themselves from the FED.

        Those would be the huge corporations, banks, military-industrial-complex and uber-wealthy 1% (or 3% or 5%). They have people called lobbyists that us little folks don’t. They control Congress.

        Those people have re-written all of the rule (including the tax code) to benefit themselves at the expense of the “little guy”. That’s why real wages in the USA have been flat for 50 years (my lifetime).

        That’s why we, the USA, one of the richest countries in the world, with a wealth of resources has only raised the min. wage from 1981 ($3.35/hr) to 2021 ($7.25/hr), less than ONE THIN DIME a YEAR for 4 decades.

        That’s why stimulus is necessary because the average American apparently doesn’t have $400 for an “emergency” as was reported a few years back. That’s why the last President’s $2T give away to corporations and the wealthy was so grotesque.

        The puppeteers have painted the country into a corner. Bernie Sanders said to Jeff Bezos: “You’ve got $182 BILLION DOLLARS! Why are you trying to keep your employees from getting a raise?”

        It’s a great question. The huge corporations, MID, the 1% and their lapdogs, all of the GOP and most of the Dems (but not all), will destroy us w/the greed. $3.90 min wage raise over 40 years!

  26. cas127 says:

    Petunia,

    “Unemployment benefits are at best low wage income”

    Broadly agree with you but,

    1) There are a lot of reports of a substantial percentage of unemployed making more while on unemployment (with Covid kicker)
    than they did while working.

    I don’t know if these reports are overblown…there should be some annual income stats/segmented versions of those stats that should tell a more complete story.

    2) It is hard to reconcile the unemployment impoverishment story with the *increased spending” in aggregate in some subsectors (which Wolf periodically highlights).

    With 27 to 10 million jobs being lost from March of last yr to now (out of 150 million existing pre Covid) it is hard to see *any* product sectors growing if unemployment wasn’t paying a *premium* to prior work wages.

    Possible (PPP kicker, interest rate gutting) but difficult.

    Would definitely like to see 2019 vs 2020 personal income stats and their breakdowns.

    3) Regardless, this is one screwed up country economically.

    • Petunia says:

      Just as an example lets take a Florida worker who is unemployed. Let’s assume they qualify for the 12 weeks of Florida unemployment plus the federal extensions. I will be generous and assume they qualify for the full $275 weekly benefit at a salary of $30K.

      This worker would be almost even on take home pay minus a few dollars. Any worker making more would suffer more under unemployment. Anybody making less than the $15 HR it takes to earn $30K will be better off getting the extra boost, but these people are not saving it, they are spending it on necessities.

      It takes a long time to make up for the things you can’t afford while being broke. People who earn minimum wage can barely afford to get to work and eat. I don’t begrudge them the extra money, they should be making a livable wage anyway.

      • nodecentrepublicansleft says:

        I live in FL and know a guy who was on-hold with the unemployment benefits line for 8 hours!

        I’ve paid into the system for nearly 4 decades and decided to try out a few years back when I was unemployed. I had never tried it. Was always too proud.

        I decided: “What the hell, I’ll give it a shot.” I found, like many, the system is impossible to navigate. I would not stay on hold for 8 hours. Hence, I never saw a penny.

        This is not a flaw but a feature. Perhaps when the poor rise up and start a revolution against the wealthy, they’ll realize their collective greed went a bit too far.

        The evisceration of the US middle class is well under way and has been for 5 decades.

  27. Michael Earussi says:

    Inflation is caused by too much money chasing too few goods. Too much money alone will not cause (much) inflation. It takes a supply shortage to really drive up prices.

    Just-in-time (JIT) manufacturing only saves money when the entire supply chain works perfectly. But when it doesn’t it can prove to be very expensive. Hopefully manufacturers are learning from our present supply shortage situation to move at least partially away from JIT.

    All of those empty malls would be a good place to store extra manufacturing parts to act as a buffer when the JIT supply chain (inevitably) fails again.

  28. MCH says:

    Supply chain stresses are happening everywhere, mostly due to this pandemic, but the trade war with China is also grinding things down, a trade war that the U has no intention of ending soon.

    Was hearing for a while that FedEx delivery was getting stretched out in some areas by as much as double the time. When the world (exist China)finally opens, things are going to get strange.

  29. Wolf Richter says:

    Update on Ford:

    Ford says it will continue for now to assemble its flagship F-150 pickup trucks and Edge SUVs in North America but without certain parts due to the global semiconductor chip shortage, while it cancels shifts at two assembly plants.

    Ford says the chip shortage, combined with the shortage of a part caused by last month’s U.S. winter storm, will prompt it to build the vehicles – numbering “in the thousands” – and then hold them “for a number of weeks” until the parts are available.

    The production cancellations include three shifts through Friday at a plant in Kentucky that produces the Ford Escape and Lincoln Corsair SUVs.

    Ford has said the chip shortage could lower its earnings by $1B-$2.5B this year.

    https://seekingalpha.com/news/3674287-ford-to-cancel-shifts-partially-assemble-some-vehicles-in-global-chip-shortage

  30. DR DOOM says:

    As the Bard would say if alive, Cry havoc and unleash the dogs of price increases. Corporations are making more on less units of everything. Dumb ass American consumer has been trained from birth to bop till they drop. They will pay out the wazoo and love it. OWJ and his administration will have to keeping feeding the American Consumer free money if they
    want to keep the power, and the corporate dogs know it.

  31. Auldyin says:

    Is this not a classic case of “the more there is, the more there is to go wrong”? If cars didn’t have all that electronic ‘crap’ there wouldn’t be a chip or plastic problem. Why put a part from China in your product if you don’t have to?
    The actual life quality gain from so called ‘modern’ products is illusory when measured as function/$. My first car was 30yrs old when I bought it in 1960. With a bag of spanners in the trunk I would go round the world in it. Now, I wouldn’t go to the supermarket without a breakdown insurance and a mobile phone. Even then I worry about the phone signal and if the tow truck will find me. Under the hood is a no go zone. We’ve all been sold a massive ‘pup’ by marketers and complicit regulators taking our freedom to choose away. If you find a car without any ‘crap’ tell me, I’ll buy one.

    • 91B20 1stCav (AUS) says:

      Auld-the way i always heard it from the engineers was: “…if something works really well, it doesn’t have enough ‘features’, yet…” (perhaps a technological corollary to the old human ‘Peter Principle’, wherein a human rises in a hierarchy to/beyond the limits of their competence in performing the missions of that hierarchy?).

      may we all find a better day.

Comments are closed.