Supply Shortages Loom as Economy Readies for Reopening

Number of the Day: The most relevant or interesting figure in personal finance

47 NOTD

That's how many years ago material deliveries were as slow as they were in March, underscoring the threat of widespread supply chain shortages for a U.S. economy readying for a surge in consumer demand, a manufacturing survey showed.

The Institute for Supply Management (ISM) said on Thursday an index measuring the pace of supply deliveries showed the greatest delays since April 1974, when the market was readjusting after an oil embargo ended in 1973. The delays were widespread across industries including wood, plastics, and electrical equipment.

At the height of the pandemic, when governments closed down businesses to slow the spread of COVID-19, supply chains were disrupted as workers were required to stay home. But the index is actually showing an even slower reading now, amid transportation problems and worker shortages. If these bottlenecks don’t start to clear—especially as pandemic-related limitations lift and people want to spend again—demand could swamp the supply of goods. And when there are too many people chasing too few goods, that usually means rising inflation, economists warn.

“Manufacturers are struggling to get the stuff they need,” Wells Fargo economists wrote in a note after the report was released. “From high-tech inputs such as semiconductors to basic industrial supplies such as steel, and even finding the labor to staff the factories, businesses have a supply problem.”