Why Is the US Short on Everything?

John Csiszar  Thu, November 4, 2021

When it comes to the supply chain, the U.S. — and indeed, the world as a whole — is experiencing a perfect storm. Evidence of a bottleneck of goods is everywhere you look, from shipping delays for items you purchase online to the hundreds of container ships just waiting for a chance to unload their cargoes at U.S. ports. There isn’t a single issue causing these delays, but rather a complex intertwining of a myriad of factors. Here are just a few of the conditions that are creating shortages in the U.S. at the present time.

Demand

In spite of the effects of the coronavirus pandemic, the U.S. economy has actually been doing quite well in 2021, and the state of the U.S. consumer is solid. As part of the $4 trillion the U.S. government poured into the economy during the pandemic, Americans received about $804 billion in stimulus checks directly, while unemployment benefits reached $567 billion.

Americans used some of this money to pay down their credit card debt, to the tune of over $100 billion, putting them on more solid financial footing. Many Americans have also benefited from the huge jump in home prices, granting them access to additional equity. Combined with pent-up demand from stay-at-home orders during the pandemic, Americans have both the money and the desire to buy products, putting tremendous demand on the supply chain.

Microchip Shortage

Increased demand is OK for an economy if there is enough supply to meet it. Unfortunately, a number of factors are restricting the supply chain. Perhaps none is as important as the microchip shortage.

East and Southeast Asia are prime manufacturing spots for microchip manufacturing, and that region of the world has been hit particularly hard by the Delta variant of the coronavirus. This has resulted in numerous factory shutdowns, crimping the supply of microchips.

And while you might think that microchips are just for high-tech companies and businesses, they’re actually necessary for many modern consumer goods, from smartphones to appliances to automobiles. The chip shortage has an incredible ripple effect, slowing production in a vast number of consumer goods as companies can’t get enough chips to make enough products to match the demand.

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