Extracting COVID's Ongoing Toll

"Higher energy prices are also adding to inflationary pressures that, along with power outages, could lead to lower industry activity and a slowdown in the economic recovery."

International Energy Agency

"Collectively we have underestimated how big the supply chain issues [are], and especially for semiconductor shortages, have been or have become."

Taco Titulaer, CFO, Dutch navigation and digital mapping company Tom-Tom

"Pandemic shortages worsened when problems surfaced in the global supply chain. A shortage of semi-conductor chips first appeared in the auto industry when a reduction in orders by manufacturers coincided with soaring demand from the technology sector as work and shopping shifted online."

"Shortages are defacto price increases. Higher prices, longer wait times, fewer product options and lower quality of service all represent an increased cost to consumers."

"Eventually, problems in the global supply chain should be resolved, especially once demand slows after Christmas."

"But high energy prices and labour shortages may not dissipate quickly, while the retirement of older workers will prove hard to reverse."

Philip Cross, former chief economic analyst, Statistics Canada

Shoppers enter a clothing store on Sainte-Catherine

Street in Montreal on Oct. 6, 2021. Photo by Graham Hughes/Bloomberg files

Now that pandemic restrictions are being eased and expectations for economic recovery look to the future, the rise in economic activity steering toward normalcy has exposed supply chain shortages even as companies struggle to find workers, ships and fuel to power factories. A looming reality of frustration threatening the foreseen recovery. The largest chicken producer in the UK has warned the 20-year cheap food binge in Britain is in its end-stage.

 

This is a reflection of warehouse workers, truckers and butchers at the fifth largest economy in the world, facing an acute shortage of workers to fill fundamental jobs. In Japan weak growth has seen many consumer items soaring in price even as wages remain stagnant as they have for decades where now consumers face down a price shock for basic foodstuffs. 

Around the world central bankers are on high alert and inflation sits in the wings in Spain, Ireland and Sweden. Christine Lagarde, European Central Bank president, speaks of the temporary nature of both: "The impact of these factors should fade out ... in the course of next year, dampening annual inflation". American President Biden announced the Port of Los Angeles to join the Port of Long Beach, working 24 hours a day to clear up 500,000 containers sitting offshore.

And then there is the critical issue of a dwindling power supply just on the cusp of winter's approach. In northern China, coal prices are at record-high levels; power plants are stocking up on fuel while facing an energy crunch, where factory gate inflation is at a 25-year high, in the second-largest economy in the world. In the U.S. the average retail cost of a gallon of gasoline reflects a seven-year high, with the expectation that winter fuel costs will surge.

Carmakers still recovering from coronavirus disruptions have been forced to halt production again thanks to a global shortage of semi-conductor chips. Taiwan has seen TSMC, the world's largest contract chipmaker, realize a 14 percent leap in third-quarter profit, central to plans to resolve the global chip shortage. A shortage that now affects smartphone manufacturing, laptops and consumer appliances.

A warning was issued from discount retailer Poundland in Britain, that pressure on global supply chains increased to the point of less raw material available, leading to commodity price inflation. Most sectors have seen firms fruitlessly searching for workers, approaching those who either left the labour force or moved to other jobs. At one and the same time there are high rates of unemployment and also job vacancies, reflecting government programs meant to support people through the pandemic.

A record number of cargo container ships wait to unload due to the jammed ports of Los Angeles and Long Beach near Long Beach, California, U.S., September 22, 2021.

Mike Blake | Reuters