United States, Supply Chains, Consumption and Vaccines – 10/25/2021
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It’s 7:38 a.m. on Tuesday, October 19, 2021, and I’m taking a taxi from Kennedy Airport to the New York Times Building. If he had made this trip so early in the morning, when there was no traffic, it would have taken less than half an hour. But finally the trip took an hour and 15 minutes, to cover about 16 miles.
What is the cause of this traffic congestion? We may see significant delays on the Long Island Expressway and the Queens-Midtown Tunnel; I don’t know what he was about. It can be accidents, stuck cars, or just some kind of random traffic jam that always happens once the roads are sufficiently crowded. However, at the most basic level, the details are not the point. The reason the Kennedy and New York Times commute takes longer on the morning commute than during off-peak hours is because that’s what happens when more people try to take highways that the road network can easily handle.
It’s a way of looking at the basics of supply chain issues that drive up prices and can interfere with holiday shopping.
There have been excellent reports on details logistical chaos Kyu Ha Credo loss of just about everything, with plenty of coverage focusing specifically on the Port of Los Angeles traffic congestion; This gateway and its adjacent port of Long Beach are entry points for 40% of US ocean imports, but it’s important not to let the details obscure the big picture.
The Suppliers Not broken: American ports are already unloading a record amount of cargo. The reason everything is late is because people are trying to buy more things than ever, and their demands are beyond the capacity of the supply chain, like the morning traffic in New York. They are beyond the capacity of the road network. And once things get too tense, small counties tend to turn into big delays.
In the accompanying chart, you can see actual spending on consumer durables, from cars to kitchen appliances to exercise equipment, expressed as an indicator with the onset of the pandemic at 100.
There was a significant increase: 34% in 13 months! , which decreased only partially. I also outlined the pre-pandemic trend, to show that this was a far cry from previous experience.
What explains this increase? Overall consumer demand was strong, driven by stimulus controls. But this happened during previous economic booms. What’s special this time is that demand has been skewed: consumers are buying fewer services and more goods than usual. Or as we might say, they gave up experiences and gained things instead. The other accompanying graph shows the consumption of durable goods and services since the start of the pandemic, with durable goods outstripping services since April 2020.
Why bias? It’s not a mystery: we were afraid to enjoy many of our usual experiences and bought things to make up for it. People were eating less outside, either because they were prevented from eating inside or because they didn’t feel safe, so they redesigned their kitchens. People can’t or don’t want to go to the gym, so they buy exercise equipment.
So what can help solve supply chain problems? Emergency measures, such as trying to mobilize resources to keep outlets open 24/7, can help a little. In the long run, investments in infrastructure can help a lot more: ports, railways, etc. From the United States is in poor condition compared to its counterparts in other countries and can be improved significantly.
But the most important thing that can bring quick relief is to undo the demand bias by making people feel safe buying more services and fewer goods. The way to do this is by getting the epidemic under control, especially by vaccinating more people.
How can we vaccinate more people? the states. No need to spend time refuting claims that asking workers or customers to be vaccinated is an assault on freedom—sorry, but freedom doesn’t mean having the right to expose others to life-threatening disease. At this point, we can also dismiss claims that vaccination demand will disrupt the economy: while many people have told pollsters that they would stop working instead of vaccinating, in practice the employers who asked for vaccination have experienced the resignation of a few of you.
In other words, what our economy needs now is a bullet in the arm, or rather, millions of shots by millions of weapons. Vaccine mandates will provide those vaccines, in addition to saving lives.
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