"2021: The year of surprise shortages"

American consumers and businesses face an array of shocking shortages in 2021 — the result of corporate miscalculations in the early days of the pandemic. The shortages range from labor to lumber to rental cars.

As vaccinations rise and the economy grows back to its pre-pandemic size, Americans are tantalized by the prospect of the country reverting to something approaching the familiar old normal. While that might happen eventually, it could take a surprisingly long time for a new equilibrium to establish itself.

Until then, expect a constant stream of headlines about supply being unable to meet demand across a large range of industries and sectors.

Shortages have appeared in multiple areas.

In lumber, high prices are a consequence of the decision by sawmills to shut down production a year ago, in anticipation of an economic slump.

In auto, high prices reflect decisions by chip manufacturers early in the pandemic to concentrate on making semiconductors for consumer electronics — which were expected to boom — at the expense of making chips for vehicles, which were expected to be hit hard by the broader slump in travel.

In the restaurant industry, which is struggling to find workers, experienced servers found themselves with almost a year to find other jobs with better job security and fewer health risks.

In expensive cities like New York, many simply left town. Hiring was generally not easy even before the pandemic, and it's much more competitive now that so many restaurants are trying to staff up aggressively at exactly the same time.

These shortages don't mean the economy is overheating. If anything, they mean it isn't yet hot enough. As industries like sawmills, semiconductor fabricators and restaurants grow out of their recession slump, supply will increasingly meet demand and prices will more likely to go down than up.

In an advanced economy, supply chains and lead times can be extremely long and complex, even for seemingly simple items like lumber. Disruptions to global shipping — an industry that has never been nimble — only make it harder to get back to normal.

Rebuilding those supply chains for a reconfigured economy, and finding the new natural state of dynamic equilibrium, is extremely difficult and time-consuming.

Pockets of sticker shock on things like rental car prices are therefore likely to remain for at least the rest of this year.

If price rises in a certain items are caused by temporary shortages, then the inflation is also likely to be temporary.
https://www.axios.com/pandemic-shortage ... fe223.html
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

Re: "2021: The year of surprise shortages"

Cheap airfares during the pandemic are now gone, but don't plan on renting a car at the other end.
The high demand translated into rates of $250 to $500 a day for the few cars that were available, with many airport rental agencies completely out of inventory.

It got even worse this week. According to Weinberg, there’s not a rental car to be had at any of the major Florida airports right now. He predicts the situation will be similar next week and possibly the week after that as well. Weinberg reports also seeing rental squeezes in Texas (Austin, Houston, and Dallas/Fort Worth, in particular), Phoenix, and Denver.

The reasons why are many, but add up to a perfect storm hitting the industry.
First, last May saw a bankruptcy filing by Advantage Rent A Car, which subsequently reduced its U.S. outlets from 40 to about eight.

Hertz, too, filed for bankruptcy protection, requiring the company to offload about 200,000 vehicles.

Other brands also sold off cars when the pandemic gutted demand. That means the renters now have far smaller fleets than were available at the end of 2019.

For a variety of reasons—including an upsurge in road trip vacations and the flight of urbanites to the suburbs—consumers are also renting cars for longer periods, says Weinberg. When people hold rentals longer, it further depletes the supply of available vehicles.
So now that demand is returning, why don’t the car rental companies simply buy cars?

Unfortunately, that’s easier said than done. A global shortage of semiconductors and computer chips has slowed the production of new cars to a trickle, and the price of existing inventory has been jacked up accordingly. To buy new cars, rental agencies must now compete with consumers and do without the discounts they can usually depend on.

According to Weinberg, the norm is for rental car agencies to pay 30% less than consumers for a new car. That can't happen right now. "A lot of the rental car industry is arbitraged between what they can buy [cars] for and what price they can sell them for when they’re done. And everything is out of whack right now because of Covid," says Weinberg.
https://www.frommers.com/blogs/arthur-f ... -travelers
"Everyone is entitled to their own opinion, but not their own facts." - Daniel Patrick Moynihan

Re: "2021: The year of surprise shortages"

CDFingers wrote: Fri May 07, 2021 9:50 am As luck would have it, first we moved here and then they built the brewery. So no shortages in some critical areas.

They knew you were coming so they built the brewery to prevent shortages of the needed brew. :beer:
Facts do not cease to exist because they are ignored.-Huxley
"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." ~ Louis Brandeis,

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