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It wasn’t that long ago that our economy was running like a clockwork. Wherever you went, you could find what you needed, and whatever you wanted to order, you knew it would arrive in time. Prices were low and global supply chains were perfectly functional, and everyone expected things to continue that way for the foreseeable future. Then, the health crisis hit. And alongside with it, it came chaos. The media alarmed the population as if the apocalypse was here. Led by fear, people started wiping out grocery shelves in multiple waves of panic buying. Shortages became a common thing. At that time, we thought that they were only going to be temporary. Now, we are not so sure about that anymore. Meanwhile, our leaders keep telling us that this is a “recovering” economy, but how can that be true if economic conditions continue to get worse and shortages are spreading across more and more industries with each passing day?
If this is a recovery, does it mean that shortages and explosive prices are the new normal? At this point of 2021, we’re experiencing a level of scarcity of products far worse than anything that we experienced in 2020. Now, even those who rely on prescription medication to survive have been struggling to find dozens of important medicines, given that pharmaceutical companies are facing major supply chain problems. According to the FDA, there are currently about 120 medicines listed as having a shortage in the United States.
At first, although shortages hit essential items and food staples, it was possible to live without them. But now, it has evolved into a life-threatening situation for millions of people who can’t find the critical medicine needed to ensure their survival. This wasn’t supposed to happen. And supply shortfalls are being registered in pretty much every sector of the economy. For instance, the home building industry is coming to a halt due to the lack of materials and skyrocketing prices. “Builders are delaying starting new construction because of the marked increase in costs for lumber and other inputs,” explained Mike Fratantoni, senior vice president and chief economist with the Mortgage Bankers Association. He also mentioned that “supply shortages for appliances are also putting a damper on new home building activity”.
When asked about these shortages, Sue Wastell, home building executive and president of Wastell Home, stressed that “it’s getting worse and worse every day. Literally every day, we’re finding out something else is not arriving when it was scheduled to. We’ve never seen anything like this”. According to the president of Homex Development, Matt McCurrach, “the whole supply chain is out of whack.” And what has been concerning experts the most is the ongoing global semiconductor shortage, because just about every industry that you can name is highly dependent on equipment that requires computer chips.
However, recent CNN reports are telling us that “a growing number of manufacturers around the world are having trouble securing supplies of semiconductors,” which has been delaying the production and delivery of goods and threatening to hike the prices paid by consumers even further. “The shortage is going from bad to worse, spreading from cars to consumer electronics,” says the report. And with most part of chip production concentrated in a small group of suppliers, analysts are warning that the crunch will persist for a long time. Automakers have been in total despair as the chip shortage is forcing the shutdown of many of their plants. Ford Motor, which is one of the automakers feeling the shortage most acutely, has announced that production in the second quarter will decline by about 50 percent.
According to Bloomberg, the world economy is suddenly running low on everything. The main difference between the 2021 supply chain crisis and past disruptions is the magnitude of it and the fact that there isn’t a clear end in sight. Big or small, few businesses are immune to the crunch. On top of that, transport costs have been more volatile than ever and shipping problems won’t lighten up until demand does.
Many Americans have never witnessed such widespread shortages in their entire lives. If this is the “recovery” our economy will get, we seem to be doomed to a perpetual state of recession, especially considering that several other crises are erupting all over the country. It is just hard to believe our leaders when they say that “everything is going to be just fine”. Well, you can believe them if you want, but in case you don’t want to wake up to a crumbling nation and find yourself extremely disappointed, you should start getting ready for the most brutal paradigm shift in the history of America right now.
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