Can’t meet demand due to shortages of labor, components, and materials. And facing soaring input costs, they’re jacking up prices at record pace.
By Wolf Richter for WOLF STREET.
Manufacturers struggled to ramp up production to meet rising demand, hampered by material and component shortages, labor shortages, difficulties in keeping employees because they’re going after better opportunities, long lead times, shipping delays, port congestion in the US and China, rolling blackouts in China, and transportation chaos. Getting goods out of Asia is particularly tough. They’re having to pay more for everything, and they’re passing on those cost increases via record price increases, and they’re not seeing any letup of those increases in costs and prices.
That’s about the summary of what executives of US-based manufacturer said in the two manufacturing Purchasing Managers Indices (PMIs) released today, the “IHS Markit U.S. Manufacturing PMI,” and the “Manufacturing ISM Report On Business.”
According to the IHS Markit U.S. Manufacturing PMI:
On one hand, there was a “steep rise in new business at manufacturing firms” and a “historically elevated” expansion in new orders – though that growth was slower than the records of the prior 10 months – according to the IHS Markit PMI.
On the other hand, there were “capacity constraints,” including material shortages, labor shortages, lead times that were “among the most marked on record,” “too extensive” delivery times, “a lack of input availability,” and “a severe deterioration in vendor performance.”
So, unable to meet demand, production increased but at the slowest rate of increase in 10 months. And backlogs of work rose “at one of the sharpest paces on record as firms grappled with pressure on capacity.”
Input costs for manufacturers in October along with August and September rose at the fastest rate “since data collection began in May 2007,” amid “hikes in vendor prices and greater transportation surcharges.”
Manufacturers “continued to partially pass on higher costs to clients,” with their price increases accelerating to “the fastest pace on record.”
Manufacturers purchased more inputs, despite rising costs. But “stocks of purchases rose only modestly. And “stocks of finished goods fell solidly.”
The Manufacturing ISM Report On Business:
“October saw US manufacturers report yet another near-record lengthening of supply chains, with shortages of components constraining production growth to the lowest since July of last year,” according to the Manufacturing ISM Report On Business.
“Supply and labor constraints” pushed the growth of production “below the pre-pandemic long-run average.”
Among the companies that reported lower production in October – note the still feeble pushback against higher prices in the last item:
- Around 50% cited “a lack of supplies.”
- Around 10% cited “a lack of labor.”
- Around 25% “reported that demand had fallen, often as a result of customers either lacking other inputs or pushing back on higher prices.”
But demand growth “remains well above trend despite easing in October, hence producers saw another steep rise in backlogs of uncompleted work.”
The New Orders Index grew, “supported by continued expansion” of New Export Orders, while Customers’ Inventories Index remained “at very low levels,” and the Backlog of Orders Index stayed “at a very high level.”
Manufacturers faced “an unprecedented number of hurdles to meet increasing demand.”
“Congestion at ports in China and the U.S. continues to be a headwind, as transportation networks remain stressed,” the report said.
“All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting products.”
Meeting demand is also hampered by “hiring difficulties and a clear cycle of labor turnover: As workers opt for more attractive job opportunities, panelists’ companies and their suppliers struggle to maintain employment levels.”
“Worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions, and overseas supply chain problems” continued hamper manufacturing growth potential.
“The Prices Index expanded for the 17th consecutive month, at a faster rate in October, indicating continued supplier pricing power and scarcity of supply chain goods.”
Selling prices that manufacturers charged their clients rose at a record pace, and “inflationary pressures continue to build and look unlikely to abate to any significant degree any time soon.”
Inventories expanded faster for the wrong reasons, because work-in-process inventory was held longer “due to key part shortages”; and more finished goods inventory was held “due to downstream customer issues.”
What some of the executives on the ISM panel said:
“Global supply chain issues continue. Getting anything from China is near impossible – extreme delays. Microchip and circuit breaker shortages continue and are expected to continue into 2022.” [Computer & Electronic Products]
“Business is getting stronger, but the supply chain is getting worse every day.” [Chemical Products]
“Demand continues to be strong, but we continue to be held back by supply chain issues – logistics delays, as well as capacity and labor issues at suppliers.” [Electrical Equipment, Appliances & Components]
“Strong sales continue; however, we have diverted chips (semiconductors) to our higher-margin vehicles and stopped or limited the lower-margin vehicle production schedules.” [Transportation Equipment]
“Import costs and delays hurting business, requiring more safety stock for uncertainty. Rolling blackouts in China starting to hurt shipments even more.” [Food, Beverage & Tobacco Products]
“Business remains strong, with brisk incoming orders. We have become much more supply driven versus demand driven, due to shortages of labor, materials and freight. Costs continue to increase on all fronts, and we are considering our third price increase of the year for our customers.” [Furniture & Related Products]
“Customer demand remains high. COVID-19 related supply chain issues still hamper our ability to meet demand. Labor is still difficult for our suppliers to obtain, and labor costs are rising.” [Machinery]
“Demand for our products remains strong, but we continue to struggle to secure enough raw material to keep our manufacturing lines running.” [Miscellaneous Manufacturing]
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Here in North Texas I don’t see any shortages in grocery stores, clothes/shoes stores, Dollar General or Dollar Tree, Walmart, Target, discount stores or home goods/home decor, toys pet stores. All are well stocked up. Shelves are full.
Price increases, yes. It’s bad.
Construction supplies, vehicles’s parts, car industry in general, I’ve heard of shortages and disruptions.. I think apliances as well.
Some sectors are doing well for now and some have been struggling for a while now.
At least there’s plenty of food on the shelves. Expensive, but available
Same here south of Houston. Store shelves are full but everything is expensive. Stores are packed with customers.
My friend and I were talking about getting a used pickup truck for my new ranch. My first question was “What if it needs a new alternator?” You might get the vehicle but can you get the parts?
Went out to grab a bite this week. Entree plus one drink plus tip over $50. Last time I order fugu! 😎
So for me, buyer’s strike. I can afford it but I’m not paying. I’m going back to growing my own, both at home and on my ranch.
Growing your own fugu? Either you got a lot of training or a lot of guts. I like seafood too, but I have limits.
Anyway Good luck.
He’s full of you know what.
we were on week long trip – so we ate out nearly every day
$50 lunch for 2 – gotta love airbnb for left overs
heck our nice dinner at Italian restaurant was about the same(well $80 for 2)
now back home we have NO PLANS FOR EATING OUT – which we used to do weekly
grilling instead and booze is far cheaper
Texas ranch-raised pufferfish?!
Prepared by an amateur?
In other news, Tesla instantly starts delivering cars to Hertz against the ‘order’, without even signing a contract! No shortages there.
‘ 2 Cars’ is also plural. At even just 2 Tesla can claim it’s ‘delivering cars’ and deflects the suspicion there is no real contract and the news was hype. Of course no doubt it’s more than 2, but who knows.
Reading further: ‘delivered to Hertz’. Meaning transferred ownership to Hertz or drove X number of cars to Hertz lots?
If it was any other car co, you could assume what is implied is actually the case but with this BS machine…
For example. Tesla has a unique way of valuing its lease fleet, a key metric. Instead of getting back cars with the usual depreciation, it will get back cars that have greatly appreciated!
Why or how? Because each can be loaded with ‘self- driving’ and instantly be transformed into a very valuable Uber taxi. The fact that
‘self driving’ with no one at the controls will only happen at some point in the future, does not prevent Tesla from grossly over- valuing its fleet in the present.
It’s a bit odd that Tesla has had such a soft ride from SEC etc. No doubt being a US co helps. Germany has told Tesla to stop calling cars self- driving.
kleen, some of this is an illusion. stores know that empty shelves look bad, so they move things around to avoid this. so if widget b is unavailable, they’ll put their supply of widget a from the warehouse on the shelves where widget b used to sit.
this of course means we have fewer choices, but it’s not something you’d immediately notice unless you remembered what was there previously.
Fewer choices indeed jw:
For just a bit of perspective, when the architect specified a beautiful pattern in the glass for the shower in a new addition, we and he were forced to go for a more ”plain jane” type because the glass manufacturer no longer made many or most of those beautiful patterns due to the ”energy crunches” of the 1970s.
Wonderful client took a look and chose out of what was available…
AFAIK, those beautiful glasses have never become available again in USA… and, IMO, some or many or most such esoterica will be gone again with this ”crunch”…
Just as back then,,, back then being, according to a lot of data and articles and comments, the height of the USA as global hegemony…
Many very good reports and analyses of similar rises and falls of empires, including Roman and British available to learn from…
Not much hope that the apparently totally historically illiterates currently the paid puppets of those of the oligarchy who DO understand this process, will do the right thing(s) to correct the fall of the USA empire, eh?
Just read on CNN that the CCP is telling people to stockpile food!
And this from a socialist country. Only the rich guy can stockpile, thus depriving the poor guy. If the CCP thinks food is going to be short, it should be rationing amounts not encouraging huge ones.
ZH overhyped that one. They’re just making sure people have some food at home so they can survive an unexpected lockdown… such as when the CCP goes nuts over an isolated COVID detection in a crowded place like Disneyland Shanghai. But that’s just the same routine prep warning that applies anyplace that has weather, earthquakes, potential protests or power shutdowns, which is like everywhere anyway…
Why do you find this advice strange?
Even “western” countries tell people to stockpile. The government even distrubuted a flyer to all mailboxes with detailed information on what to stock up on and the recomended amount.
As for only rich stockpiling, yes if it is large amounts. But if everyone just all hold essential food and other supplies for a week it can make crises management a lot easier.
You are lucky. However, what you see on shelves was weeks or months getting there. The supply chains mean that when a place in China is closed down due to Covid, and the policies there are to lock down areas that have covid detected reportedly, the items produced there are not produced for weeks or months until there is resolution, not even considering the coal and diesel shortages reported.
It will then be weeks or months when that hole in the supply chain results in shelves being bare of that item. The same applies as to other items but since we (thankfully) produce our own food and some other goods, those categories produced in the US or other countries (not China) are not subject to those considerations.
Of course, other countries have their own issues. The question is which of our/EU overleveraged companies will follow the examples of the CCP real estate developers and start going insolvent. I dare the “Federal” Reserve to try to bail out all of the financiers’ and banksters’ cronies that own or operate those entities.
I think that the web that is the world economy may soon develop holes, more and more holes.
I forgot to add that like the old proverb as to for want of a nail a kingdom was lost, our/EUcompanies may fail and be unable to produce, such as car manufacturers for want of critical components lost in the supply chains, like chips or other parts or services that become unavailable. How will this all play out?
With a war economy mentality, chip fabs and other critical component production would have been in production in a couple of months. Instead, the US and others have not done anything except probably to keep phoning and begging for parts.
How it will play out is obvious.
I am afraid you grossly underestimate the time required to build modern chip manufacturing plants, whose creation in Arizona, etc., is already subsidized with billions this year. Chinese, CCP controlled railroads, buildings, and nuclear reactors are built in such haste.
Thus, their high speed railroads need huge, annual subsidies, their buildings crumble with strong winds, and their nuclear reactors leak.
Sorry for replying to RH. But couldn’t find a reply link under robert’s comment. The time from start of construction to start of production is typically two years for wafer fabs. And then you have the next steps – packaging and testing – which need a whole lot other kind of infra. Not sure how even a war footing can reduce this to two months since many of the very specialized equipment are supplied by just one or two firms globally We need to ignore the other big factor – finding enough qualified and experienced people to run these manufacturing facilities.
My “supply chain” for fresh meat is less than a mile long. That is the distance to the foothills where the venisons hang out. If I want a full year’s supply I can always chase up a moose a little further up the canyon. I have a lifetime supply of the necessary brass and lead because I invested in them instead of shiny, soft metal which has no utility value.
On the other hand for those foolish enough to live in a Big Shitty like San Fransisco their fresh meat starts in Argentina or Vietnam. It’s then shipped China, packaged and loaded onto a container freighter and sailed to Long Beach harbor where it sits until a truck happens to become available to haul it to a “grocery” conglomerate warehouse. And you wonder why it tastes like six months old leather!
I met with a builder today about several home remodeling projects and was told they’re not even scheduling exterior work. The biggest obstacle is getting enough tradesmen and materials. Appliances are widely out of stock. Shortages are not the exception but the rule.
There are shortages of odd things here in Wisconsin. I have noticed at times that our favorite Peanut butter will be out of stock, the next week there will be no canned mushrooms available.
The past week our favorite yogurt has been “out of stock”. Cuts of beef sometimes unavailable. But this week the local Aldi had plenty, and the price even went down $1.50 LB.
Of course, I suppose there could be pallets of stuff in the backroom, with no one to put them on the shelf. The grocery store staff seems to change weekly, but maybe they are just working different shifts?
Soon the trucking companies will be blaming the weather. Because the air is so full of moisture, not far from here, they are reporting an unusual 11 inches of fresh snow. Which is a bit early this year.
Since the trucking companies and shipping firms are making money hand over fist, I don’t expect anything to change. Corporations own the USA government on so many levels. They also employ the lobbyists who write the laws for the legislators. They even have their own organization to do that for them (Alec, look it up sometime).
The idea that “truckers don’t know how to write” is insulting. I have not driven a truck in 40 years — very hard work for ridiculous pay. But will concede that some truckers might have difficulty writing.
As for all the people complaining that their Chinamart junk is getting expensive. I suggest they wait for the big January sales. That is, if corporate America is able to unload and deliver everything by then.
We’ve had very cheap meat occasionally. A friend tells me the local meat plant can’t find shippers or warehouses sometimes, orders get cancelled, and the locals benefit from cheap (and fresh) meat in the smaller local independent grocers.
Same goes for other local produce. If one has a freezer, grows some of one’s own, and buys the rest locally on sale, food is actually cheaper this year. You have to cook though, as the food inflation on processed and prepared stuff is huge.
Big difference between “knowing how to write” and putting out a promo piece that goes viral. They author of that piece is running for political office in WA and his campaign likely paid someone to write this.
On his campaign website, he says that he drove a delivery truck delivering to homes in his district, and it appears he wasn’t an over-the-road trucker.
Just wait until the automated logbook software crashes or is hacked. BTW, another reason port blockages, besides the buck not stopping at Buttgig’s desk, to chassis shortages, rail personnel shortages, is the computerization and automation of the cranes at dockside. When software crashes, crane stops working. The Biden Depression is going to be long, dark and deep.
It’s not quite an “Everything Shortage”: there’s still a surplus of hot air in Washington.
I suspect over-complicated supply chains are the real-economy equivalent of over-indebtedness in the financial economy. In both cases, too many weak links in the chain leads to fragility and then a breakdown under unexpected stress. Is this a Minsky-Like Moment for Manufacturing?
If so, how long will it be before the supply-chain snarls result in cascading debt defaults?
Supply chains are not overcomplicated. Nor is anything else.
There are only two problems.
1) Counterproductive regulations.
2) Wages are too low compared to expenses for many people who are productive.
The great machine of the global economy has too much friction, and the gears are being starved of oil.
And one could argue there’s only one problem, because if you removed the bad regulations and regulators, you could lower taxes so wages would be good. You could also remove the regulations which essentially create monopolies/cartels, which is in fact the primary purpose of most new laws these days. So the problem is:
1) Too much government.
“When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” – P. J. O’Rourke
P.J. O’Rourke……he wrote for National Lampoon for years.
His writing and ideas haven’t improved since then.
P.J. rocks. A true libertarian and a professional journalist who dared to go where others feared to tread. Not just as a journalist, but actually physically going to the hot spots for boots on the ground reporting.
I have an old hardback copy of “All the Trouble in the World” that is falling apart because I’ve read it so many times. He gets to the core of human nature.
You can’t read his books without concluding that the vast majority of problems in the world are due to the behavior of ignorant short-sighted people, whether in a Moroccan bazaar or Davos.
Libertarian does describe him.
I find the human nature comment highly amusing.
One thing libertarians lack is empathy which is a big part human nature.
I can’t point to a single libertarian screed that has even a morsel of empathy within it.
Look at Rothbard….proclaiming the rights of parents to refuse to feed their children.
I just got back from the polls and cast my vote for a Libertarian candidate for Mayor of Minneapolis.
I have empathy for those around me, as does my wife, and I look out for family, friends and neighbors.
I agree with Michael that pretty much everything written by P.J. O’Rourke is a good read.
It’s easy to have “empathy” at someone else’s expense.
That’s the progressives. Always willing to volunteer the (endless) sacrifice at someone else’s expense.
Thank you for your comment.
You have proven me right….yet again.
After Bachelor Home Companion, I did not encounter anything useful from PJ. At most, he is a humorist.
Too much government ?
Hmmmm…. let’s parse this thought.
Would that be the government of China, India, Canada or Saudi Arabia.
After all, it is a GLOBAL supply chain.
It always amuses me to see the ” if only government would go away everything would be Rock Candy Mountain great “. It also pretends that corporations are helpless. Let’s have some ” personal responsibility ” for corporations. After all SCOTUS has declared them persons.
Multinationals created the supply chains for their OWN benefit. They chose to build them to lower costs to the bone. Thus they lack resiliency. And due to pressure from a global pandemic, they failed. They are continuing to fail and may now be unworkable for years.
Don’t you think it is rather optimistic that eliminating regulation and taxes would lead to higher wages ? Painful experience has demonstrated time and again that any such savings would go to C-suiters and dividends. Not a single dime will go to raising wages.
In additions the companies involved in the supply chain are ALREADY fabulously profitable. They can raise wage rates right now. No waiting for abolition of taxes is necessary.
So let’s look at the real problem. Multinational corporations seeking maximun return created a feeble supply chain.
Seeing as the immediate supply chain bottleneck at this time is – ships at anchor to trucks with container carriers – is not international and appears to be due to US and California regulations.
I agree on the multinational construction of the international supply chain problem to max profits.
Railroads are maxed out in terms of hauling containers, and their rail yards inside the US are maxed out — Union Pacific and BNSF said that in their earnings reports — and they cannot take away more containers from the ports of LA and Long Beach. There is a chassis shortage to haul containers from the ports. This is a problem at the port of Houston and everywhere. Warehouses are maxed out and cannot handle more containers (where goods are taken off the container and redistributed to regular van trailers that are then hauled by trucks). Everything is maxed out and clogged up throughout the US. Blaming this on CA regulation is just political silliness that totally misses the big picture.
BTW, the CA emissions regulations went into effect Jan 1 2020, nearly two years ago, after years of preparations, and there was no problem last year. Worked just fine.
The author of that article that claimed the entire transportation issue was due to CA regs just woke up 22 months too late and penned this nonsense, and didn’t even say that the regs had been in effect in ALL of 2020 and didn’t cause a problem after they went into effect, and stuck on a clickbait title, and it went viral, and become a new region with certain headline-reading folks.
In order to be more efficient you have to sacrifice redundancy. When the SHTF there’s no backup redundancy to fall back on.
Nope…..feeble supply chains built with fingers crossed and ” hope nuthin’ goes wrong.”
Oh and those regulations were written by lobbyists representing the multinations who created incompetent supply chains.
So once again….to paraphrase a guy…. ” Private enterprise is the problem”.
Wolf, let’s keep the debate at a level Buttigieg could understand. My point was the shipping delays at issue are the result of US in-country issues and not international. How could they be if the ships from international originations all arrived but are stuck off the US ports?
To prevent unhealthy corporate consolidation that kills jobs, we need a progressive tax rate on corporations. Small business should pay little if any tax. Large corporations should pay the going rate. That would solve the consolidation problem with minimal intervention and government overhead cost.
I categorically disagree with your statement.
The evidence is very clear that much of the existing supply chain problems are due to a lack of regulation.
Specifically, that consolidation in the trucking and shipping industries give excessive market power to the handful of companies dominating that space. As such, they have zero – even negative – incentive to do their jobs better.
Trucking companies don’t care if there is a shortage in hauling capacity so long as they control all/most of it. Shipping companies actually generate more revenue in this present situation both via penalties for “failure to pickup” and by charging extra for “express” delivery.
This is all directly a consequence of de-regulation, not over-regulation.
Allow me to be clearer, there is FAR too much government. I accept your point about consolidation, but government itself is behind the consolidation, as it is across all markets, because the burden of regulation falls far more on the small operator than the larger.
Eliminate ALL regulation, and the point becomes clear. Any carrier, even the buyer, could send a truck to pick up their own container(s). Now, I am not advocating eliminating absolutely all laws, but I think there should be around 90% less.
It should not be possible for any regulation to fall more on one size of operator than another, and that’s why we are in the mess we’re in.
Truck-ghosts from pre-regulation days:
Vanderbilt (railroads, the precursor to trucking)
Let’s get rid of Glass-Steagel, too much regulation, there…
SOMEONE/SOME financial ‘TRUST’/SOME CORPORATION is ALWAYS trying to BUY ‘too much guv’t.’, and we, the people are by now dab hands at idly watching it happen, only complaining when it our personal oxen are gored…
“…a well-regulated market…” -Adam Smith
“…in a democracy, the people get the government they deserve…” -Thos. Jefferson
“…we have met the enemy, and he is us…” -Pogo (the cartoon creation of the late, great Walt Kelly).
may we all find a better day.
I’m currently reading a great new book “To Rule The Waves” and it talks about the rise of container shipping , impacts on supply chains etc. One thing I remember is that an iphone contains parts from 40 countries. I’d call that complicated Truckman.
Complicated it is, but there’s quite a difference between complicated and over-complicated.
There are several factors which make the current situation so bad, including insufficient storage to deal with interruptions, exploited personnel which ruins new recruitment as well as experienced staff retention, and of course massive over-regulation.
The accountants got rid of the ‘slack’, but as is now obvious to everyone, the ‘slack’ was there for a reason.
The problem is too much market and not enough energy (peak oil is here).
Out-sourcing to China. Very good for a few, very bad for the many and the nation.
Well, we did export our pollution.
Think of earth as a ballon we live in ,now ballon is still filling with pollution ,your not exempt or are politician’s or rich poor
I’m pretty sure the pollution didn’t just stay in China.
It came back here in the form of plastic goods, eventually to be scrap.
I am not sure of the exact numbers, but as Powell and Yellen said they would rather do too much than too little. Not sure why they didn’t try to do the right amount, but basically they filled a $5 trillion hole with $10 trillion and the system can’t handle it.
As Larry Summers says it’s not difficult, basic arithmetic.
“As Larry Summers says it’s not difficult, basic arithmetic.”
Mr. Summers failed that class when leading Harvard some years ago………!
Not really, he got in trouble saying that boys were heated more toward math than girls. Next saying boys pee more standing up than girls will be a no no.
And the CONgressional clownshow is trying to pass a MASSIVE stimulus package in the face of an already OVERSTIMULATED eCONomy. Has anybody bothered to ask WTF they are doing, and why? Adding more stimulus is just going to jack prices up even more. We need a positively massive depression right now, to wring out the excesses and flush out the weak hands and all the bad debt.
Truckers that are independent contractors no longer working the ports as waiting 12 hours or longer for a container pickup is a money losing proposition. Union. Walmart and Amazon drivers doing pickups as they get paid by the hours. Independent Contractors get paid ZERO to wait
Demand collapse coming. The country stopped. They are all on strike. … Or they Had to make rent.
Sorry Wolf but this point I cannot help but feel this is all orchestrated bs for a narrative. They know exactly what they are doing. Business school 101 “business loves inflation.”
It’s a love-hate relationship. They love inflation (price increases), they hate inflation (cost increases).
Consensus forecasts has CPI YoY inflation dropping from 5% range to 2.5% range in mid-2022. Bloomberg has inflation staying above 5% until at least early 2023 with continuing supply chain constraints.
Biz may like 5% inflation, but a majority of voters will not after a few years. I’m concerned that mid-term elections in 2022 will temp the govt to cut a few trillion more of stimmy to buy votes and thus create a perpetual loop of higher inflation into 2024…and then of course general elections could push more stimmy and high inflation into 2026…perpetual madness…
Republicans will take the Senate in 2022 and will NOT pass any more stimmies…
Business loves stability, and the ability to plan and make forecasts.
Speculators, with the attention span of a butterfly, love inflation.
Inflation is very good for business under certain circumstances.
1) Price Increases > Cost Increase = Margin Increase for doing nothing
2) Large (Excessive) Debt load = Payback with cheaper dollars. Just have to maintain (1) above, which is easier than ever for the large multi-nationals. There is nothing like inflating your debt away.
Inflation has a tendency to cover up a multitude of Managerial oversights (I mean errors) ( I really mean f ups).
Big misunderstanding that stocks love inflation. Even cash is better than stocks when PE is too high.
the problem with the stocks are a good inflation hedge argument is that it assumes that inflation means that public companies can raise their prices as much as they’d like with no change in consumption, but that their inputs don’t go up in cost at all.
it’s a complete fantasy. stagflation hurts public companies, big time.
I do see labor shortages here in the DFW area. That is the most noticeable issue.
Products not so much, labor yes. In all industries but mostly construction.
A lot fewer immigrants.
People, especially people in north Texas, got used to low-cost immigrant labor.
i was thinking that perhaps ‘cheap’ should be permalinked to the word ‘labor’ as seen so often here, there, and everywhere…
may we all find a better day.
I often have said that the party ends when the producers don’t want to feed our non-productive consumption financed by our fiat due to the reckless monetary policy aided and abetted by the Fed and its master Congress. WS research has not pushed me off my position. Is this what it looks like? I never thought that the producers would take out an ad in the NY Times to tell us the party is over. This could be start of bad mojo coming our way. Or it is transitory and just a blip on the o-scope? It’s a bit much to wrap my meager brain pan around. I will just have to wait and see what happens. I do feel confident that the Fed is a threat to the Republic.
“the Fed is a threat to the Republic.”
I think so. with prejudice.
Please stop buying what is not essential. Save yourself a ton of money, and wait for the dust to settle. It’s common (c)en(ts)!
Yes, I do agree, stop feeding the monster. The monster also includes Wall St.
I agree. I punched out numbers for Tesla. Assuming Price to sales reverts to long term average of 1 and cars sale for $50,000 they would need to be producing 26 million cars per year to justify that price. That’s Toyota, VW and GM production combined.
Remember that Inflation = Price lncreases.
When all of the Problems and Issues are resolved or improved upon then we should all be rewarded with Price Decreceases.
Reminds me of chaos theory.
It is explained in part by chaos theory, especially the nonlinear responses.
It’s nothing like Chaos Theory.
CT can be stated mathematically, but is very sensitive to initial conditions, and yields behavior which is non-periodic.
This is just chaos.
The problems at the moment are quite solvable by many people, including a lot of commenters here. However, the solutions would involve much of the current idiocracy being out of power, and many top business people being in jail. Turkeys don’t vote for Christmas.
Less theory and more organized chaos…now I get it…
I don’t think, as some do, that this chaos is organized. The truth is that those in authority are far less capable than most people think, especially themselves (Dunning-Kruger).
Never ascribe to malice that which is adequately explained by stupidity ;)
The one good thing about being a manufacturer right now is you don’t have to take any crap from your customers anymore. One of mine was complaining his parts were 2 days late, and I laughed and said he was lucky he was getting them at all. I told him he needed to wake up and smell the coffee because people were waiting an extra 6 months for similar stuff from overseas. Most of my competitors are not only not taking new customers but actively shedding troublesome or annoying customers due to lake of capacity.
Are you seeing any moves by US companies to prioritize US-based suppliers in order to get better grip on their supply chain? Is this something you can see from your perch?
This is discussed all the time in the chemicals industry. The fact is we consume products that are dirty and expensive to produce and Asia subsidizes most of it. I heard yesterday the largest resin reactor (produces intermediate chemicals for paints & adhesives) in the US is going down for maintenance in the next few weeks. We’ve been warned as there are no others to pick up the slack domestically. The only moral solution to all of this is to consume less.
Just read yesterday, on NOLA dot com, that a chemicals producer down from the storm, will have to wait up to 2 years to get recertified and/or inspected. This is the type of governmental dysfunction that is everywhere in America now. The state knows this is an important industry, but they don’t have the leadership to act with expedience.
A major saw manufacturer is only servicing existing customers. Won’t take on new business. I could produce 5 times what I do now, but don’t want or need the hassle of of watching Crackberry addicts getting their every 5 minute fix from their dog whistle.
Yes, I do see it to the extent that it is possible. I have a customer who supplies trendy bar ware to cocktail bars. I am right now ( today) making a shaker lid that was previously made in China. The customer wanted to bring it on-shore but was not ready to pay the price. But after the latest round of shipping delays and cost increases they decided it was worth it. In China they were stamping the part in three steps ( stainless steel sheet) but we have little small scale stamping and die making capacity left in the US so we laser cut the part and do the forming in 4 extra steps. Ours is nicer though.
Good to hear that some of this work is coming back.
I always appreciate your ‘boots on the ground’ reports. Thanks.
I am glad to see you getting more business.
You touch on a great issue that my wife is also seeing at her company due to labor shortages: re-proritizing clients, necessarily starving some out. Her health insurance business contracts are annual, so I feel sorry for those costomers that are small, who are having to ride out the reduced service until they can sign up with another provider. Likewise, her company is “firing” some clients that drain a disproportionate amount of resources.
There is definitely a big EFF YOU going out to customers right now. Employees are also putting themselves before everyone else. I can’t say I blame them…this is the first taste of power employees have had for a long time… but it will not end well.
The companies who stay true to their culture and customers are the ones who will ultimately thrive. We are in for a wild ride.
Agreed. There’s no real problem finding construction work now. I’m able to cherry pick to a degree and charge what I should’ve been charging a long time ago. The real problem is finding labor. Materials are a pain in the ass but we’re finding them. Windows is the biggest hold up, with cabinets being next. There are on the shelf substitutes for most everything, but ALL materials are way more expensive than a year or two ago. This fallout of the pandemic was either all by design or the result of massive incompetence by our leaders. Either should be of major concern.
Investopedia: “It is important to keep in mind that the GDP figures, as reported to investors, are already adjusted for inflation. In other words, if the gross GDP was calculated to be 6% higher than the previous year, but inflation measured 2% over the same period, GDP growth would be reported as 4%”
Is that actually true?
I’ve been reading that experts don’t agree about the relationship between GDP and inflation. And I’m having trouble getting a grasp on why people just spending more (and paying higher inflated prices), regardless of the productive value of the item, increases GDP.
Over here in Thailand, I can buy stuff shipped directly from China (from low margin online entrepreneurs). But I don’t see how that significantly benefits the GDP of Thailand.
There is “nominal GDP,” which is expressed in “current dollars” meaning without inflation adjustments. Nominal GDP in Q3: $23.2 trillion, +7.8% from Q2.
There is “real” GDP, expressed in 2012 dollars (meaning it’s adjusted for inflation by the GDP deflator): $19.5 trillion, +2.0% from Q2.
All numbers here are “annualized” meaning essentially multiplied by 4: if you had four quarters in a row like this, that’s what you’d get on an annual basis.
How much is the labor shortages tied to the vaccine mandate? If we use some of the airlines as well as police and firemen in NYC, it seems the 10% to 20% that are not working as a result illustrates the impact what may be seen in other parts of the US economy.
The virtuous cycle of the “wealth effect” has turned back on itself and is now a vicious cycle of the “I got mine” effect.
The cost of housing is now rising so fast that blue collar workers can’t save fast enough to keep up. So why bother? And if you’ve given up on the American Dream, why stay at the crap job you used to tolerate to get it?
The dream broke during covid.
Now, as the cost of living spirals upward, workers are spent and demoralized. Without trust in their employers, it’s difficult to get them back at any price because they know they’ll just rejoin the Red Queen’s Race and never really be able to catch the American Dream carrot.
Employers did this to themselves. From large to small, they drank the Disposable Worker Kool-Aid for way too long. Do you think they’ll learn their lesson now? Nope. The ones at the top making decisions are there because they are the best at outsourcing everything, including blame.
They. Will. Never. Blame. Themselves.
re: too-many employers-a paraphrase of the scene in Simon’s ‘Odd Couple’ wherein Oscar responds to Felix’s alarm over the lack of pasta sauce for a meal by replying: “…Whaddaya mean? I thought it just comes when you boil it…”.
may we all find a better day.
Just to get a “feel” for how enormous the supply side issues are at the moment…
Bloomberg – –>The more than 70 ships anchored off Los Angeles, for example, are loaded with enough 20-foot containers full of goods to stretch from Southern California to Chicago if laid end to end.
Of course one trillion dollars laid end to end circles Earth’s equator 387 times, and is further than the distance from Earth to the Sun…
So what else could we expect when the global central bank cartel printed tens of trillions globally after shutting down the supply chain for 3-4 months in 2020?
Live and Learn…and may future generations live more wisely…
Is that not the problem right there? That is the backlog that must be cleared. Would an Asian manufacturer produce and ship goods only to see them fall into the back end of that lineup?
Goldie locks scenario_
GFC they printed but not enough
COVID they printed too much
2022 TBD disaster they will get it dialed in just right, we hope
Wolf – How about using “Operation successful, patient dead!” for a future article discussing “Stagflation-Lite”…HA…per Bloomberg:
…the current environment — call it stagflation-lite — is a challenging one for central bankers.
Keeping rates at their current lows would allow the recovery to continue, but risk prices spiraling higher if households and businesses come to expect more of the same. Tightening would quell inflation not by addressing inadequate supply, but rather by stifling demand. It could turn into the monetary policy equivalent of the surgeon who declares: “Operation successful, patient dead.”
There is an article that’s going kind of viral in the logistics world at this moment: “I’m A Twenty Year Truck Driver, I Will Tell You Why America’s “Shipping Crisis” Will Not End” by Ryan Johnson.
Highly recommended reading, after which you can only conclude that this supply chain mess is not going to go away anytime soon. Bigger delays and higher costs as far as the eye can see.
Energy crisis, shipping crisis, excessive debt, pandemic, distorted pricing everywhere and stonks into the stratosphere. How long before it is all going to blow up?
I read that article. This quote is striking:
“At the point we are at now, things are so backed up that the backups THEMSELVES are causing container companies, ports, warehouses, and trucking companies to charge massive rate increases for doing literally NOTHING. Container companies have already decreased the maximum allowable times before containers have to be back to the port, and if the congestion is so bad that you can’t get the container back into the port when it is due, the container company can charge massive late fees. The ports themselves will start charging massive storage fees for not getting containers out on time — storage charges alone can run into thousands of dollars a day. Warehouses can charge massive premiums for their services, and so can trucking companies.
Chronic understaffing has led to this problem, but it is allowing these same companies to charge ten times more for regular services. Since they’re not paying the workers any more than they did last year or five years ago, the whole industry sits back and cashes in on the mess it created. In fact, the more things are backed up, the more every point of the supply chain cashes in. There is literally NO incentive to change,”
Hire cruise companies to run operations best in world at logistics
The other great insight there was the fixed amount of cranes at ports in spite of the ever expanding volume of cargo. No incentive to increase the number of cranes when you can charge more now than you would make with the additional cranes, volume adjusted. In other words, like other parts of the economy, the shift to (essentially) monopolies over the last four decades has destroyed the real economy. Anti-trust laws used to be enforced for a very good reason!
“The other great insight there was the fixed amount of cranes at ports in spite of the ever expanding volume of cargo.”
It’s not a crane shortage. According to a guy who hired a boat to observe activity at one of the west coast ports recently, only a tiny fraction of cranes were even active during the hours he watched. If one can’t move containers out of the ports there’s no place for the cranes to stack them. It’s a log jam. 24/7 operation won’t fix that.
“things are so backed up that the backups THEMSELVES are causing container companies, ports, warehouses, and trucking companies to charge massive rate increases for doing literally NOTHING.”
Shipping Containers From Stranded Ships Abandoned In California Neighborhoods [waiting trucks parked there, too – W]
Carriers Must Move 60K Containers Out Of Los Angeles/Long Beach By Halloween
A total of 60,000 containers have been marked as beyond the dwell time and need to be moved out of the ports of Los Angeles and Long Beach by the carriers or the penalties will start racking up. A total of 33,000 containers need to be rolled out of the Port of Los Angeles and 27,000 loaded containers for the Port of Long Beach — a whopping $2,633,940,000 value in trade.
Carriers were put on notice this week when the ports announced that, starting next Monday, a daily surcharge of $100 per container will be levied. Did this light a fire and a surge of containers being moved?
No. [because they CAN’T move the containers out – W]
“This penalty was not intended to be a passed-on [to consumers; yeah, that how things work, right? – W] cost,” explained Mario Cordero, Port of Long Beach executive director, at a port update press conference.
It went viral last week. People have been stuffing my inbox for days with it. This is what I replied to one of the people who sent it to me:
“Nearly all of what he said has been widely reported including on my site. In terms of his last big paragraph (“My Prediction…”), I’m not sure I see that. But could be.
“He is a very good writer, especially for a truck driver. This is a professionally written and structured piece, not done by an amateur. And there is a bit of union promo in it. Plus a very common name that is impossible to verify. So I’m not sure what this is. I don’t think it was written by a truck driver. It was written by someone who knows how to connect with an audience and explain complex things in simple interesting ways. This is hard to do. The internet is a weird place. But it was a very good read.”
Being a REAL trucker and writing well is not incompatible.Truckers can even write books.First book contains mathematical formula 😀
“Sweatshops on Wheels: Winners and Losers in Trucking Deregulation” by Michael H. Belzer
Mr.Belzer drove 900,000 miles for UPS
“The Big Rig: Trucking and the Decline of the American Dream” by Viscelli, Steve
Also Mr.Viscelli posts his lectures on YouTube
Nowadays both authors are happily ensconsed in the Ivory Towers of Academia.That’s what I call success in trucking aka Sharecropping USA
he is running for state rep in WA:
Thanks. How cool! Now we know: PR job for election purposes. His campaign spent some money on this article. Pros did that, and pros made it go viral, which is not easy, and his campaign had a reason to pay them well for it.
But he was more of deliver-to-the-house driver, not over-the-road trucker:
“I have probably already met many of you by delivering to your homes or businesses. The 39th is one of my routes and my geographic knowledge of the 39th is extensive.”
thanks for putting two and two together.
that flew right over my head.
Interesting reporting on the trucking & port situations on YouTube channel “Sage News”. Eric covers the L.A port situation in much detail.
Great article, worth reading. What a nightmare.
We found out that the author is running for office in WA, so this was written by his campaign for political purposes. See comments right above in this thread.
Turns out, he wasn’t an over-the-road trucker but most likely a delivery driver delivering to homes, per his own campaign statement.
The internet is a strange place.
I keep reading about labor shortage and seeing signs looking for workers. I also read about many people quitting jobs & companies using robots to replace humans.
It seem to be across the board: from low skill to professional.
Then I read about clamping immigration immigration and keeping people out.
Seems that the US can be cherry picking workers from the world to upgrade our labor pool in terms of skills and willingness to work hard
The labor shortage has actually kept some supply chain issues in balance. If we actually expanded our labor like we wanted to 6 months ago we would be completely out of raw material. This less than optimal output has kept our head above water……barely.
Giving people money for doing nothing (in the form of PPP, stimulus payments and additional unemployment) demotivates people to work harder or work at all.
So does the asset mania which has created a lot of fake wealth.
And lord knows, we have to keep those worker bees motivated……less our cush lives fade away.
Nobody has a birthright to minimum living standards at someone else’s expense.
Anyone disagreeing can support these people at their own expense.
No business is entitled to cheap, hardworking employees.
Employers definitely feel entitled to that.
Capitalism certainly functions from that viewpoint.
How will companies get these robots. There is a chip shortage. Oh… maybe Tesla can make them…
Ahh the workings of the wonderful free markets. Now if we could all get tax cuts, that would be terrific heh! Sorry folks. Capitalism does a face plant every decade. This one’s a doozy.
The government shut down the economy, whether anyone agrees it was necessary or not.
The private economy (aka, “capitalism”) isn’t perfect but it didn’t create the biggest asset and credit bubble in the history of civilization on it’s own either. Central banks (a government creation) are one of two pillars (the other being financial intermediation) which facilitate the existing mania psychology.
If you lock back in history, the national state may be more of a bank creation than the central bank a national state government creation.😉
Polaris had a news release to report earnings on Tuesday, 26 October. Their North American retail sales fell 24% over the summer as they could not keep production up with demand because of supply chain disruption.
“Retail sales were impacted by the substantial deterioration of the supply chain permeating in the global economy, but the continued interest and demand from existing riders and new customers advanced our market position,” said the CEO, Mike Speetzen.
Shocks (dampers) & semiconductors are the two component shortages doing the most damage.
Two side notes:
Polaris will “divest” its Global Electric Motorcar and Taylor-Dunn businesses by the end of the year. Together they pull in less than $100 million in revenue.
Elon Musk mentioned an electric ATV “was on the drawing board” at Tesla at their annual meeting on 7 October. Next month, Polaris should launch their side-by-side Electric Ranger ATV.
I’ve not been reading news, as it’s all so depressing. But to read these real world accounts of the nuts and bolts of supply chains. Were screwed! I th ink by plan… like this resin supplier going off line for maintenance. So many fishy reasons for bottlenecks.
My car has been in the shop now nearly a month waiting on a inhibition switch. Have no idea when we get our car back. Sherwin Williams the other day said they still do not have quarts in satin or gloss. Going on months now. A friend with an engineering firm losing employees who just want instant home. Can’t deliver projects and get paid as cannot get parts. Can’t start projects to fulfill contracts , can’t get parts. Will know in a couple of months if he folds. Fifty employees. He says it’s happening to many smaller firms like himself and it’s going to get worse
In lieu of an ignition switch, can they teach you how to hotwire the car like in the movies? Purely as a stopgap of course…
I suppose they’ve gone and overcomplicated that part so it’s not easily replaceable with a generic toggle switch…
Yes that right. My car suffers from a lack of inhibition. Terrible. Pops off swears at people, backfires. Dribbles oil. Can’t get that inhibition switch soon enough
When all else fails, I the only option is to laugh at the whole situation.
Or the other great option that seems to work for many commentators: just blame “too much government regulation.”
I prefer laughter at this point.
That matches in hilarity my articles on the US transpiration issues. I don’t know how many times this happened. These things are really hard to detect because those words look so similar when you’re going fast. I just love AI.
It ain’t gonna get better anytime soon. The JIT revolution, which is in reality a manifestation of neo-liberal austerity as it’s applied level of the firm.
The most experienced and effective agency for logistics in the World is the US Military.
If this was a real crisis beyond hand wringing, a crisis that required a real and effective action, there would be an immediate intervention. When Reagan wanted to break the backs of unions he did it with the Air Traffic Controllers, first by threat and then with the scabbing out of military controllers. By imperial decree. Thatcher did it against the coal miners, employing head smashers to shut the mines down and break workers. Somehow the readiness of the US military did not collapse as it was repurposed for the all important travel industry and the greater purpose of putting people in their place. Air travel thrived and folks could go on their vacations and business trips without additional worries of a work stoppage. The World did not end. Will the same thing happen here, when truckers and port handlers demand a competitive wage?
Tongue in cheek, but consumer buying disruption is not the end of anything much. For now. What I find interesting is how complex everything has become, and the obvious lack of resiliency in such a finely tuned machine of relationships and the market.
A repurposed of the ancient, this Ben Franklin version said it quite well:
For want of a nail the shoe was lost,
for want of a shoe the horse was lost;
and for want of a horse the rider was lost;
being overtaken and slain by the enemy,
all for want of care about a horse-shoe nail.
For want of a chip, the car was parked,
and for want of a car, the sale was lost;
dinner out missed, the restaurant forced to close,
all for want of a silicone chip.
The horror, thinned out shelves of Walmart plastic junk and shite clothing. My God, no one signing up for new 84 month car loans, excuse me….SUV financing. Maybe time for a reset to more local production, anyway. Plus, reduced consumption.
Only problem is stocks are priced for perfection and this ain’t it it. Sooner or later someone is going to run for the door and then it’s on.
The U.S. Military takes months to organize the logistics for major conflict.
Supply bottlenecks come from complacency and myopia. Manufacturing out-sourced to China, transportation all bottlenecked into a few ports, and politicians and free-riders constraining the movement of containers.
Solution? Made in the USA.
The idea about trade is you do what you are best at. If you want to do everything within your borders you are going to have a lower standard of living. However USA offshored too much and let the benefits accrue mostly to the rich, probably because they have nearly all the influence in DC.
It was only possible to the current extent because of debt and credit. No way consumers with stagnant purchasing power (look at median household income and net worth since late 90’s) can afford to pay increasingly higher developed market prices otherwise.
Without making up the difference through borrowing, domestic demand would be flat if not lower now than 20 years ago.
Another area of too much demand: auto body shops in the DC area. My car was hit several weeks ago and getting an estimate (much less the work) was difficult. In the shop now after 2 1/2 weeks of waiting. Yesterday, a neighbor told me that he was rear ended over the weekend and it will be four weeks before he can an ESTIMATE (at a good body shop nearby.
JES, a friend of mine owns a body shop nearby. He, too, is bombed with work. He has a dozen RV’s in his lot that are banged up due to this years run of people buying these things during Covid with little or no experience driving such a big vehicle.
He’s got the work because the RV dealers are swamped with broken RVs that need repairs or maintenance. They have farmed out the body work to my friend and other body shops in the area.
This winter I’ll bet there will be a ton of one or two year old RVs that will be for sale on Craigslist and other venues.
So now, the U.S. can’t increase manufacturing output even if it wanted to? And it doesn’t. It’s a good fix we’ve gotten ourselves into: Nobody wants to work because of over stimulus, parts depend on China and container delivery, broken internal delivery infrastructure, rising costs in energy and commodities, you name it.
Meanwhile, corporations and banks can borrow unlimited funds from the government at 0% to buy out anything they want, move production out of the country even if there were anything going on. We can’t even grow robot manufacturing in the U.S.
Raise your hand if you’ve been conditioned to believe the economy is cyclical. Me, me, me!
Raise your hand if you believe manufacturers/wholesalers/retailers/etailers will cut viciously during a downturn to attract business. Me, me, me!
So when did we last have a downturn? Raise your hand if you believe we may be due one soon – especially if Fed raise rates?
Upshot? While distressing while it’s happening, in the longer term it’s my opinion this is much ado about nothing. Not really ‘nothing’ if you’re paying $4/gallon for milk and on the lower end of the earning spectrum, downright painful for you, then – but – my major point is, there will reversion to the mean, which will affect price increases. It’ll happen in due course . . . unless this time really is different.
Anyway, I counsel patience. Meanwhile, yesterday I looped into McDonald’s at the urging of my grandson. This, for some dollar fries. They were $2.19 and we took a pass (me, actually, because while he didn’t understand, he nevertheless paid the price of doing without). So we got chicken sandwiches for $1.39, instead. They were tasty and he was happy enough. Bottom line? We will adapt, improvise, and overcome.
Meanwhile, now’s the time to sell a car you’re not using if you can get by with Uber for a while. Wiferecently took a sabbatical and we haven’t put 500 miles on her car in closing on two years. May be a good time to sell your home and rent for a while, too. Why?
Simple, it’s because I predict when the air is let out of this balloon, it’s going to be to the tune of a big time whoosh of deflation for a lot of asset prices. That’s when cash is king! Bought the company plane that way back in 2009. Just put it on the block now while prices are absurd.
;planes are very expensive to maintain and store, in reality you will probably lose money
Meanwhile, I noticed this morning that some gas stations on the north side of Houston just went to $3.00 per gallon for 92 octane (regular). This is the first time in a long time we are seeing that number.
The most stupide advice from a boomer to sell a car and house and buy later at lower price .Input costs to make a car and build a house are 50% more.They can not stop printing any more.
As a chemical manufacturer myself, I can vouch for the robust demand and lack of raw materials. About half of my products use a US-made resin that I’m receiving at a fill rate of about 30%.
Of course, the chemical company won’t tell me what the problem is, but my best guess is they are using a component(s) sourced from China that is sitting on those ships anchored offshore.
In addition to all of the other price increases, the metal cans my products go into are going up “at least” 50% the first of the year.
Luckily, my business has been debt-free since 2011, and we only buy things like new vehicles and equipment when we can write a check for them so weathering this storm isn’t a concern for me as much as it is for my retailers.
What an effin mess.
Yes, that’s the biggest problem about “bringing back” manufacturing jobs and decoupling. So many of the processed materials that we use here are sole sourced back to China, and we’ll have to build many of these supply chains from scratch. I suspect that will be the problem with semiconductor fabs we’re building here; China may put some of those rare earth metals (yes, not rare) on its export bans.
Just about all the rare earths can be sourced from the US and Canada, but they will be a lot more expensive. On the plus side, the environment won’t be a toxic wasteland like in China ;)
The idea of banning toxic mineral exploitation here, but allowing foreign competition to do it and export here, is a new level of stupid.
Same goes for enforcing factory fire safety standards but allowing exports from countries that don’t have them.
Etc, times a trillion.
Truck-a lot of corps. considered that a feature rather than a bug since the first ‘Earth Days’ back in the late ’60’s…
may we all find a better day.
How much of this ‘stacking’ at the ports/terminals is in effect causing the FIFO to LIFO problem?
To all the laments about supply chains and all the conspiracy theorists:
Most of the time they’ve worked perfectly. Now with C 19, stimulus etc. they’re having problems. This doesn’t call for fundamental change or so many people’s fave, a revolution. The latter usually make things worse.
In due time, things will straighten out and we can all go back to our privileged First World Life.
Disagree, they weren’t working perfectly before, and things have been getting worse for years. Covid, or to be specific governments’ handling of it, was just the last straw.
True, nothing is perfect. 2 years ago you could order most stuff and be told within a few days when it would arrive. The Christmas before last Amazon was guaranteeing delivery in time on stuff ordered 10 days before. Auto parts, including modules have always been overnight or 2-3 days if unusual. When in the past has an assembly line shut down for lack of parts?
‘Just in time’, AKA Toyota System, has worked without a hitch for 30 years. It will work again.
Nick-akin to becoming so accustomed to the light switch working that one has no subsequent knowledge of the function or location of the breaker panel-panic (and stumbles in the dark) may ensue…
may we all find a better day.
Nice little story line from 2003 the Fed, past Governor Kohn, about the FED’s view of Inflation and commitments to Price Stability:
All the citations to Goodfriend’s comments on Inflation targeting in the US are a good read too.
I think what will trip up even the smartest minds about this era of inflation is that the labor “supply-side” shortage may be more long term structural and not transitory (due to numerous reasons to form a perfect storm of structural long term labor changes). Unlike products, people have emotions, and emotions are often illogical, and thus this era of inflation is going to be very difficult to predict…
Capitalism has treated people as commodities for many decades, and now the people are questioning the entire construct of living “your best life”…yet the people in power are still in denial that the changes are structural and thus long term in nature…
“yet the people in power are still in denial”
They, as a class, aren’t “in denial.”
Watch the George Carlin “It’s a Big Club” video segment from one of his shows in 2005. The only thing business cares about is the bottom line and when the government is effectively owned by them, the following is what you get and it simply amazes me to think that people continue to think they have any real say in changing it. I guess they can’t face their actual impotence despite the overwhelming statistical proof in the 2014 Princeton University study that they do not… which they probably never saw:
“Forget the politicians. They are irrelevant. The politicians are put there to give you the idea that you have freedom of choice. You don’t. You have no choice! You have OWNERS! They OWN YOU. They own everything. They own all the important land. They own and control the corporations. They’ve long since bought, and paid for the Senate, the Congress, the state houses, the city halls, they got the judges in their back pockets and they own all the big media companies, so they control just about all of the news and information you get to hear. They got you by the *****. They spend billions of dollars every year lobbying, lobbying, to get what they want.
Good honest hard-working people continue, these are people of modest means, continue to elect these rich **** ******* who don’t give a **** about you….they don’t give a **** about you… they don’t give a **** about you! They don’t care about you at all… at all… AT ALL!”
I saw an interview of a propane distributor employing 130 people. He said tanks are in short supply and more expensive due to supply chain issues and increased cost of steel. Supply of propane is down 24% nationally since the same time last year. His main problem is that he can’t find employees. He needs 15 people to open a new branch, but can’t fill those slots. He said new DOT driver training requirements due to start on 7 Feb 2022 will only act to greatly exacerbate the driver shortage problem.