Port congestion. Computer chip shortages. Rumors about how this could impact the holidays.
With all the noise, many of us are taking a crash course in supply chains and how this could impact our everyday lives and the economy.
Some have concluded that these challenges were unexpected and may last for an extended period of time. Others say it demonstrates a troubled or even broken economy and will result in meaningfully higher inflation.
The supply chain meltdown, and the failure of the labor market are similar and growing from the same cause. They are the result of the government’s response (both domestically and internationally) to the COVID-19 pandemic.
Essentially, every major industrialized nation made the active decision to send their workers home and to quite literally turn their economies off.
You’ve all heard stories of skyrocketing lumber, natural gas, and used car prices. We’re seeing similar price increases within and across commercial businesses. One of the most visible is found with shipping rates – the cost of sending goods across the ocean.
The labor market is no different.
Never before have there been so many unfilled jobs. Businesses of all kinds are desperate to find new workers. We’re seeing “Help Wanted” signs flash across nearly every storefront.
We turned the global economy off, and now we’re trying to turn it back on, all at once.
If we give it a little time and patience, all of this will sort out.
Supply chain disruption and labor market tightness is temporary, self-correcting, and already rapidly healing. The result is likely to be a dramatic shift from “shortage” to “excess” and this could place considerable downward pressure on prices.
Do you have questions about this topic, year-end tax planning or anything in between? Simply reply to this email and we can schedule some time to talk.