New indicators from Bloomberg Economics predict that if the world is unable to quickly come together and deal with the global supply chain crisis, there is a chance that the whole situation will get much worse and cause a global economic collapse.
The Bloomberg Economics research supports the growing evidence of supply shortages, labor shortages and port congestion. Looming all over these problems is the rising inflation that is forcing people to pay more for almost everything.
Central banks around the world are already retracting their initial assessments that the world’s current state of rapid inflation is just “transitory.” Many central banks may be forced to hike up their interest rates to counter the rising prices. Such a move would be a threat to the world’s already fragile economic recovery.
One of the main aspects of the economic recovery that desperately needs to be addressed is the shortages of basic goods and other commodities. The rising prices, labor shortages and port congestion are forcing manufacturers to scale down their industrial activity or deal with significantly diminished profit margins.
In Vietnam, many factories that focus on making Nike shoes have already scaled back output because many workers have either voluntarily or been forced to return to their home provinces due to Wuhan coronavirus (COVID-19) restrictions. In China, new virus outbreaks and repressive local lockdowns have forced factories to increase their prices by a 10 percent annual rate, the fastest price growth since the 1990s.
Global manufacturers like Toyota are also slashing production. In September, the car company decreased its production by more than a third from 2020 levels due to shortages.
Even multinational giants like Amazon and Apple do not see the situation improving anytime soon.
Amazon is bracing itself to see its fourth-quarter profits wiped out by a sudden rise in the cost of fulfillment and labor. Apple said it lost more than $6 billion in potential sales because of its inability to meet demand. The company is expecting to lose even more money next quarter. (Related: Tens of billions of dollars worth of cargo lay anchored outside American ports as Biden-induced supply chain collapse worsens.)
Most expensive Christmas in decades
Fears are mounting that the massive inflation and the ongoing supply chain crisis will turn the holidays into one of the most expensive in decades.
“It’s going to be a tough Christmas,” said Luca Pautasso, a financial services provider based in New York. According to him, increased public spending coupled with the massive good shortages have created a “perfect storm” for price increases.
“Many projections say that this is going to be the most expensive Christmas in the last 30 years,” he said.
Pautasso noted that, although many Americans have seen a substantial increase in their pay recently, it is still not enough to stave off the huge inflation rates. “It will be hard to keep the same pace of spending,” said Pautasso. “But people are going to still try to outdo the Christmas they’re used to.”
Financial experts are already advising people shopping for the holidays to change how they operate to deal with the supply chain crisis.
Jennifer Blackhurst, a professor of business analytics at the University of Iowa and a global supply chain expert, encouraged consumers to adapt their spending habits to the situation.
“If you go to the store … and they don’t have the exact product you need, then just adapt and buy something different,” she said. “The companies are literally doing everything they can. But it’s just disaster upon disaster upon disaster upon disaster that’s causing all of these problems in the supply chain.”
“Start early and make sure you’re very mindful of your budget,” advised Mark Fried of financial planning company TFG Wealth Management.
“There will be some level of supply shortages, some delays in terms of buying goods,” warned Adam Kamins of financial services company Moody’s Analytics. “You’ll be able to get a gift for the holidays, but you want to think ahead, and you want to be a little more flexible about what you’re gonna get and what you may need to pay.”
Learn more about how the global supply chain crisis will affect the holidays by reading the latest articles at MarketCrash.news.