Reporter details how the COVID recovery has created a 'perfect storm' for rising prices
During recessions, the fact that people have less money to spend doesn't mean that their expenses have gone away — and the recession that the COVID-19 pandemic created in the United States is no exception. In May, according to the U.S. Bureau of Labor Statistics, unemployment was 5.8% (a slight decrease). The good news, from both an economic standpoint and a health standpoint, is that 63% of U.S. adults have been at least partially vaccinated for COVID-19, according to the Centers for Disease Control and Prevention. But reporter Hanna Ziady, in an article for CNN Business, describes a pesky problem that Americans are experiencing during the "post-pandemic recovery": rising prices.
"Steel, lumber, plastic and fuel," Ziady writes. "Corn, soybeans, sugar and sunflower oil. Houses, cars, diapers and toilet paper. Prices are rising almost everywhere you look. The post-pandemic recovery is in full swing, and the global economy is struggling to keep up."
According to Ziady, "Companies that idled factories or put workers on furlough during lockdowns are now unable to secure enough raw materials to build the houses, make the cars or assemble the appliances that are suddenly in high demand."
"Companies are furiously trying to restock inventories following last year's global recession, straining supply chains already reeling from the pandemic to breaking point," Ziady explains. "A shortage of shipping containers and bottlenecks at ports have made matters worse and increased the cost of moving products around the world. Throw in accidents, cyberattacks, extreme weather and the huge disruption caused by the desperate hunt for cleaner sources of energy, and you have a perfect storm."
"Demand," according to Ziady, continues to "outpace supply" —and "prices are spiking" because of "shortages of everything from microchips and chicken to chlorine and cheese."
One of the photos that CNN Business published with Ziady's article shows thousands of unfinished cars at a Volkswagen Navarra factory in Spain on May 14; the cars were unfinished because of a shortage of semiconductors. And when there is a demand for cars but the cars cannot be finished and shipped out for sale as soon as they would ordinarily be, prices increase. Ziady reports that according to the U.S. Bureau of Labor Statistics, the price of used cars and trucks increased by 10% in April.
But what Ziady is describing not only applies to cars — it also applies to food and many other things. Ziady points out that in May, "Global food prices rose for a twelfth consecutive month" and the FAO Food Price Index was "nearly 40% higher last month than its level a year ago."
The CNN Business reporter observes, "The big question is whether shortages and price hikes are temporary byproducts of the pandemic, or if the global economy is changing in ways that could permanently hike the cost of doing business and usher in a new era of inflation. The answer has huge implications for workers, investors, companies and governments."
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