What is wrong with the supply chain in the United States?

Source: Wall Street

"Core shortages" and labour shortages are hampering economic recovery, but the collapse of the supply chain may suggest bigger problems.

America's supply chain problems may not be as simple as they seem.

Last week, the Park Slope Food Co-op store in Brooklyn, New York, sent an email to members explaining that some type of spaghetti may be out of stock.

A man told the Los Angeles Times that he had rented a car to take his children to Walt Disney Company.The park ended up being directed to a van that "smelled of cigarettes and marijuana".

People are not faced with commodity scarcity. In fact, if the price is high enough, most goods can be bought eventually. In the past year, the consumer price index has risen by about 5%, double that of the year before the outbreak.

But supply chain problems point to problems with the way the world works, which could also seriously hamper a broader economic recovery.

Chip shortage affects economic recovery

The shortage of chips may be a drag on the US economy.

The most obvious problem is in the auto industry. When travel fell sharply in the spring of 2020, many companies returned cash by selling a large portion of their fleets. These companies wanted to wait until later to repurchase, but then they found that there was no car to buy at all.

The main reason for this is the global shortage of chips. According to the estimate of the Wall Street Journal, 7 million cars have not been produced because of the "lack of core".

On September 23rd, U.S. Commerce Secretary Raimundo hosted an industry summit on chip shortages, attended by Ford and General Motors Co.、 Apple IncAnd executives from companies such as Samsung, which are also competing for chips. Mr Raimundo's office says one of their goals is to build "trust" in the supply chain.

A White House briefing released on the same day quoted an estimate that a "lack of core" could reduce US GDP growth by one percentage point.

The core of the problem is labor shortage.

The core of the supply chain problem is often the labor problem.

Last week, the ports of Los Angeles and long Island were nearing a state of crisis as more than 70 container ships idled offshore that had become "stops" at sea; there were not enough longshoremen to unload and not enough truck drivers to transport the goods out of the port.

There is no doubt that the labor shortage is also related to the epidemic. Although more companies have reopened, a large number of people who were laid off because of factory closures in the early stages of the outbreak have not returned to work. Reasons include fear of infection, reluctance to deal with customers who are dissatisfied with the policy, or policy requirements to wear masks and provide proof of vaccination.

Some key staff, such as nurses and delivery drivers, may be re-evaluating their work, who have been hit hard by the epidemic; many of the more than 600,000 people who died of COVID-19 contracted the virus at work.

Moreover, even if schools reopen, the shortage of affordable day-care and day-care workers for children means that some parents who are willing to work are still unable to return to work.

Amy Davidson Sorkin, a contributing writer for the New Yorker, points out that to solve the problem of labor shortage, further examination of priorities and values is needed. Whether to cut unemployment benefits or raise the federal minimum wage, whether to increase child care, paid family leave or more immigration needs to be debated.

Supply chain problems may suggest a bigger crisis

Blaming the epidemic for the collapse of the supply chain may be an escape.

Last week, Irish Prime Minister Miche á l Martin told the Council on Foreign Relations that several supply chain problems caused by Brexit were "masked by the COVID-19 epidemic". Similarly, recent storms in the United States have caused significant damage; it is estimated that Hurricane Ida alone destroyed 250000 cars.

Sorkin believes that supply chain disruptions caused by outbreaks are likely to be dwarfed by the supply chain disruptions associated with the climate crisis in the coming years. In fact, considering these two issues together may be one of the most urgent tasks right now.

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