EDITOR NOTE: Federal Reserve chair Jerome Powell got one thing right: you might drive up demand by offering cheap money but if the supply isn’t there, there’s nothing that cheap money can do besides stoking prices, especially if buyers insist on purchasing products amid scarcity. Based on recent reports in manufacturing and labor, it appears that supply crunch risk and constraints will be with us well into 2022. Moreover, demand appears only to be ramping up, and we know what that means: inflation will likely soar in the coming year. If you’re not protecting your purchasing power from serious decline by investing in physical silver and gold, then you’re putting your wealth at serious risk. Now is not the time to do nothing. There is no neutral territory when the landscape around you is transforming into a frothy mess.
Supply constraints that have challenged businesses and caused shortages of everything from semiconductors to sweatpants are deepening, adding to pressure on inflation and testing the Federal Reserve’s resolve to keep juicing the economy.
Economists and business executives now say those supply-chain disruptions, key labor shortages and resurgent demand driven by multiple rounds of fiscal stimulus will persist through the end of the year, if not longer.
“It turns out it’s a heck of a lot easier to create demand than it is to—you know, to bring supply back up to snuff,” Fed Chairman Jerome Powell said Wednesday after the central bank’s most recent policy meeting.
The squeeze on U.S. businesses shows little sign of letting up, particularly in the manufacturing sector.
The pace of manufacturing production and hiring slowed in May from the prior month even though new orders and order backlogs accelerated, according to the May Purchasing Managers Index published by the Institute for Supply Management.
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