supply and demand

You may be able to find toilet paper and Clorox wipes with no problem these days, but our supply issues don’t seem to be quite over yet. What are the current shortages, why are they happening, and what can we expect in the future? FACT dives in to understand what is truly going on.

Shortages are currently driven by two main issues spurred by the pandemic. The first is an increase in demand for certain products and services. Shortages for products associated with hobbies or activities deemed “safe” during the pandemic have increased demand. That means things like pool chlorine, bicycles, boats, rental cars, and pet-associated items and services may be in high demand in your area. Unless there are underlying issues, these demand issues should level out as the world continues to open up and cases remain low.

The second issue driving product and service demand for certain items is a shortage of labor. International travel restrictions, unemployment benefits, and workers who re-located during the pandemic are all contributing to these shortages.

Airlines are scrambling to hire workers to meet the increased travel demands, as are the hotels people want to travel to! Lumber prices have skyrocketed due to supply chain issues and demand, but general contractors are having trouble putting together teams to build and remodel homes. As a result, home prices in many areas have reached record highs and inventory is extremely low.

When can we expect things to level out? The federal unemployment benefits established by the CARES Act is slated to end on September 6, 2021. However, at least 25 states have announced they are withdrawing from the program, most of which will expire in by late June.

Many corporations, such as Amazon, Goldman Sachs, Ernst & Young and Apple, have announced plans to have employees return to the office throughout this past spring and into the summer. As people return to their lives and routines, supply chain issues should resolve themselves to a manageable baseline. “Normal” is returning, we just have a few more bumps to iron out!