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    Hot Topic: Shortages and Bottlenecks Expose Weak Links in U.S. Supply Chains

    Discover Muscatine Staff
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    Muscatine Living

    Consumers won’t soon forget the troubling shortages of personal protective equipment during the early days of the pandemic. Now, as the economy reopens fully and all at once, consumers are again experiencing a wide array of shortages. Here’s a look at some of the events that have stressed corporate supply chains and impacted the economy in the first half of 2021.

    Gas Crisis

    In mid-May, a ransomware attack led to the multi-day shutdown of a 5,500-mile pipeline responsible for supplying 45% of the fuel on the East Coast. Existing stockpiles might have held up, but news of the outage caused a run on gasoline, and states of emergency were declared by the governors of North Carolina, Georgia, Virginia, and Florida. 1–2

    Trade Disrupted

    Longer delivery times caused shortages of some raw materials and many types of consumer goods purchased from overseas. Congestion in the busiest West Coast ports left dozens of huge container ships from all over the world anchored off the California coast. These log jams peaked in February. Now that port workers can be vaccinated, operators are aiming to clear the backlog by the summer. 3 In March, a six-day blockage of the Suez Canal by a grounded cargo ship caused massive disruption in international trade. 4

    Texas Freeze

    In mid-February, a brutal winter storm knocked out the power grid in Texas, shut down numerous chemical plants, and froze the production of plastics used for packaging and materials needed to make many goods, including auto parts, computers, PVC piping, and paint. This resulted in global shortages, production delays, and higher costs for manufacturers and homebuilders.5

    The same storm closed major chicken-processing plants. Large losses of chicks and eggs, on top of COVID-19–related staffing problems, caused a nationwide chicken shortage.6

    Lumber and Housing

    When the pandemic hit, many U.S. lumber mills were closed, and the expectation was that housing demand would falter. However, after a brief pause, demand for homes and home remodeling took off, surprising builders and domestic lumber producers. The price of lumber was already rising due to tariffs, but it has skyrocketed more than 300% since April 2020.7

    Chips and Cars

    A global shortage of semiconductors, or computer chips, is limiting the production of all kinds of goods, including home appliances, cars, PCs, gaming systems, servers, and 5G equipment. The effects of the chip shortage are far-reaching but most evident in the market for new and used cars. Auto makers have been forced to cut production of more than 1.2 million vehicles in North America.8–9

    Labor Concerns

    Some employers report having difficulty finding workers who are willing to take lower-paying jobs, and staffing issues are a contributing factor in the shortages. Some workers may be reluctant to accept jobs because the enhanced unemployment benefits provide more income than they would normally earn through work. For others, opportunities to participate in the workforce are more limited due to lack of child care or skill gaps.10

    1–2, 12) The Wall Street Journal, May 13, 2021
    3) Bloomberg, May 16, 2021
    4) Bloomberg, May 3, 2021
    5) The Wall Street Journal, March 17, 2021
    6) Associated Press, April 25, 2021
    7) CNBC.com, April 30, 2021
    8–9) The Wall Street Journal, April 19 and May 13, 2021
    10) The Wall Street Journal, May 20, 2021

    © 2021 Broadridge Financial Solutions, Inc.

    Provided by Jakob Bower, Written by Broadridge

    The material provided does not necessarily reflect the views or opinions of Principal Financial Group®. Broadridge is not affiliated with any company of Principal Financial Group®.
    Principal Financial Group® does not endorse the commentary, opinions or views of the content.

    This material should be considered general information and should not be used as the primary basis for a financial decision.

    It is provided with the understanding that the member companies of the Principal Financial Group® are not rendering legal, accounting, or tax advice.

    Insurance products issued by Principal National Life Insurance Co. (except in NY), Principal Life Insurance Co., and the companies available through the Preferred Product Network, Inc. Securities and advisory products offered through Principal Securities, Inc., 888-774-6267, member SIPC. Principal National, Principal Life, the Preferred Product Network, and Principal Securities, Inc. are members of the Principal Financial Group®, Des Moines, IA 50392. Jakob Bower, Principal National and Principal Life Financial Representative, Principal Securities Registered Representative, Financial Advisor. Retirement Resource Group is not an affiliate of any company of the Principal Financial Group®.

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