on September 6, 2022
One of the themes that crops up from time to time in my blog posts is the theme of media sensationalism. When it comes to economic and financial news, it’s easy for news and social media to whip people into a panicked frenzy. They might focus on one specific piece of negative news, over-exaggerate, or over-simplify very complex issues. All these tactics are harmful, since they can greatly influence consumers and everyday investors.
Recently, one area of focus in the news has been the supply chain. If a particular item is in short supply, suddenly that equals a supply chain meltdown. Certain types of cat food are tough to find? We are surely in an apocalypse!
Let’s put things into perspective.
Before I get too far, I want to make one thing clear: some shortages are serious (such as the baby formula shortage, which was partially caused by a large product recall). I’m talking in general terms, and I certainly do not lump life-saving medicines or other supplies into this conversation.
That said, the list of shortages due to supply chain issues is comprised of many non-essential items. Sriracha sauce, bicycles, cream cheese, and champagne have all been listed as being in short supply. If you have to swap your sriracha for another type of hot sauce, that’s hardly an emergency. The thing is, we’re so used to having fully stocked shelves that seeing any type of shortage is a shock to the system. Not that long ago, grocery stores did not stock strawberries or peaches (or other seasonal fruits and vegetables) year-round. It was a luxury to eat fresh pineapple or tangerines in the winter. Perhaps we can relearn to go without. Would it really be so bad to enjoy fruit when it is in season?
It’s true that some essential items, such as lumber and semi-conductors, are also in short supply, but these shortages were not necessarily caused by the supply chain. Lumber, for instance, was partially hard to come by due to a pine beetle infestation. Semiconductors are in short supply for a variety of reasons, ranging from increased demand to production difficulties to, yes, lags in the supply chain (in short, it’s complicated, and the supply chain is just one factor of many).
Additionally, supply chain issues appear to be correcting themselves (I bet you didn’t see THAT in the news!). According to MorningStar, labor shortages are easing, there are fewer delays with ocean freight, and freight capacity is steadily increasing.
Even if we get back to business as usual, I hope we will remember all the fear surrounding the supply chain and begin to make some changes. Why not manufacture more products domestically? Or improve recycling programs so high-value items, such as semiconductors, can be reused or repurposed? America has long been known as a land of innovation, so let’s innovate!
Though we’ve been inundated with bad news about the supply chain, we are still (by and large) doing just fine. Shipping has been steadily improving over the past several months, and I am confident we can make up for any shortages through concerted efforts and innovation.