As the world recovers from the pandemic, some countries have brought production and manufacturing back online faster than others. Supply in the increasingly globalized economy hasn’t been able to keep up with demand as prices rise. How long will these jams last and what are the ripple effects? Here’s what Chief Investment Officer Jim Lowell said in our recent webinar, Booster Shots, Market Shocks and the End of Fed Intervention:*
What economic challenges are likely to persist in 2022?
The supply chain disruptions are a big one–with part of the bottleneck coming from China. And this is going to persist a while longer, no question about it. That’s one reason behind the shift from a transitory to an episodic view of inflationary pressures on the economy. As just one example, the supply chain disruptions go through the whole ecosystem of a car from start to finish.
Even if you’re looking for a pair of sneakers or a washing machine and dryer, you’re going to find shelf space that’s emptier than consumers are comfortable with. That can create a self-fulfilling prophecy of consumers hoarding things, which then adds even more disruptions on the supply side.
The labor shortages are also mission critical to the ways in which the global economy functions. We haven’t seen higher prices based on wages in any dramatic inflationary manner, and that absolutely would be a cautionary flag for Federal Reserve policymakers. We know the Fed is watching both the supply chain and labor market and how they play into our economic recovery. The Fed is also absolutely cognizant of China’s slowing economy. China may have a real estate bubble crisis that could have implications way beyond its borders. And we may have a new Fed chair come early 2022.
Supply chain disruptions, labor shortages, inflation and the Fed… These things are not going to go away, and you can rest assured that when we have our January webinar, we will weigh in on all of them once again.
Click herefor a replay of Booster Shots, Market Shocks and the End of Fed Intervention. Please contact us at (800) 492-6868 to learn more about comprehensivewealth management solutions.
*Webinar recorded after the market closed on Wednesday, October 20, 2021.
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