Consumers, unable to spend money on services and leisure activities (such as eating out, visits to health clubs and travel) instead directed their discretionary cash toward goods, such as exercise equipment, home improvement projects and new homes to adjust to the ‘work from home’ culture. Household balance sheets improved with the support of these policies. At the same time, emergency government policies provided financial support to consumers and businesses to assist them through the pandemic’s economic challenges. Governments forced many businesses to temporarily close to limit the spread of the virus, except those deemed “essential” services. Supply chain issues first emerged early in the 2020 COVID-19 pandemic. What role might supply chain issues play going forward and what could it mean for the markets? In addition, transportation challenges mounted, including a backup of shipping traffic in some ports and a shortage of truckers to haul freight over long distances. Some companies had difficulty keeping up with demand, sourcing components needed to manufacture products or finding enough workers to fill production needs. Yet supply chain issues affecting a wider range of products also contributed to the problem. China’s dramatic COVID-19 lockdown policies, which were in place for an extended period of time, hampered manufacture and shipment of goods from Chinese firms. For a time, the war interrupted some shipments of commodities from both Russia and Ukraine. Russia is a major energy supplier and both countries are major agricultural exporters. The war between Russia and Ukraine exacerbated the challenges.
#GLOBAL SUPPLY CHAIN ISSUES DRIVERS#
Energy and food products were leading drivers as inflation soared. “Higher inflation reflected a restricted supply of goods at the same time that there was strong demand for many of those same goods,” says Tom Hainlin, national investment strategist at U.S. This represented a shortage of commodities, parts or products that created an imbalance in supply and demand, forcing prices higher. Supply chain shortfalls were a major concern during inflation’s surge that began in early 2021. Find a financial advisor or wealth specialistĪlthough the inflation picture has improved since peaking in June 2022 (with living costs rising at a 9.1% rate for the previous 12-month period), challenges remain.
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