Macroscope | Don’t ignore supply shortages, rising costs or the tectonic economic shifts behind them
- The underlying structural issues and their effects promise to disrupt everything from inflation and stock prices to wages and taxes for a long time
- Yet many policymakers prefer to take refuge in the fiction that cyclical factors and the pandemic are the culprits
This impact is likely to prove far from being the transitory phenomenon it is often supposed to be. That, in turn, has ominous implications for inflation, interest rates, stock and bond prices, wages, employment, taxes and so on, well into the future.
As the IMF observed, some of the supply constraints caused by the pandemic and other factors will prove transient but others could take a long time to ease. The “outlook is uncertain, and disruptions may continue for some time”, it said. In certain sectors, disruptions could continue into 2023 or beyond.
Unctad, in its latest Global Trade Update, also noted the “unprecedented pressures on supply chains”. Major companies have become “strongly focused” on managing risks for their supply networks, said the UN trade body, “but delays have persisted nevertheless”.
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McDonald’s Japan restricts fries orders to small size amid potato shipping snags
Contrast this with blithe and misleading assurances by investment analysts who are intent on “talking their books” by claiming that we just need to pause for a short while so that markets can shrug off the impact of supply disruptions – and continue “buying the dip” in the meantime.