The Magazine for Asian Investors
High inflation, rising prices, and empty supermarket shelves have been the main topic for weeks. Many are even talking about stagflation, which, according to the data, seems to be a conclusive term at the moment. What factors are slowing economic growth at the moment?
Supply Chain Disruption
Supply chain difficulties have led to empty supermarket shelves in much of the U.S. The news that Christmas presents may not arrive on time is also not going down well with the population. The container ships are in front of the ports and waiting to be unloaded but this could drag on because of a shortage of labor.
Shortages of essential resources such as crude oil and chips have been going on for some time. While the Biden administration is trying to place the blame on the other side, the main factors are related to its own policies. Pushing for green and at the same time accusing OPEC of producing too little oil makes the average citizen despair further at the gas pump.
Economic activity is growing at a moderate pace according to Federal Reserve data. The economic report is published in the so-called beige book based on data from the 12 branches of the central bank.
Due to the tight supply chain, several companies have increased their selling prices, indicating a rise in costs in the face of strong customer demand for goods and raw materials. In addition, many companies have had to raise wages to get people to take jobs.
Labor shortages continue to hinder growth as companies are forced to raise wages. Companies are raising entry-level wages to entice talent to return to work. They are also raising wages for existing workers to retain workers. Another problem continues to be the controversial vaccination mandate, which has caused many workers to walk off the job.
Other COVID 19 outbreaks also continue to be a problem especially in states with high vaccination rates. How long the problem with the virus will drag on remains an open question. However, there are already states like Texas that have already dropped the COVID measures.