Forget malaise, and let’s start talking Grinch. With supply-chain issues still festering for months and inflation beginning to roar, retailers wonder whether they can provide the goods for the holiday season on which they rely for fiscal solvency. The White House offered its advice yesterday, which was … get used to disappointment:
White House officials, scrambling to relieve global supply bottlenecks choking U.S. ports, highways and railways, warn Americans may face higher prices and some empty shelves this Christmas season.
The supply crisis, driven in part by the global COVID pandemic, not only threatens to dampen U.S. spending at a critical time, it also poses a political risk for U.S. President Joe Biden. …
“There will be things that people can’t get,” a senior White House official told Reuters, when asked about holiday shopping.
“At the same time, a lot of these goods are hopefully substitutable by other things … I don’t think there’s any real reason to be panicked, but we all feel the frustration and there’s a certain need for patience to help get through a relatively short period of time.”
“Substitutable”? That’s already a feature of holiday shopping, albeit more toward the last week before Christmas. If consumers have to start dropping down to Plans C, D, and E before Black Friday, that’s going to create massive discontent. And that massive discontent will only make Biden’s polling woes worse.
It looks as though that will be the case, because the Biden administration has let this fester for something much longer than “a relatively short period of time.” Container ships have backed up for months off the coast of California, thanks to a lack of access and labor to unload them and then ship their contents throughout the country. One of those ships reportedly busted an oil well head with its anchor, causing the Huntington Beach spill that briefly closed beaches. The lack of access to goods has spurred inflation even further, while consumers have already made do with “substitutable” goods for the last several months.
Politico reports that Joe Biden and his team have taken a sudden and belated interest in the chaos, having spent the last few months insisting it wasn’t a problem in the first place:
With just over 10 weeks until Christmas, the White House is leaning heavily on port operators, transportation companies and labor unions to work around the clock unloading ships and hauling cargo to warehouses around the country. Biden will meet virtually Wednesday with industry leaders before delivering a speech on the administration’s efforts to address the bottlenecks.
The supply-chain mess risks creating new economic and political turbulence for Biden in the coming months. Empty store shelves could undermine the administration’s economic recovery plans and weigh on consumer confidence. And memories of a disappointing Christmas could linger into 2022, with supply-chain problems expected to last much longer than many officials and economists expected just a few months ago.
There’s a growing fear among retailers that Washington’s efforts can do little at this point to save the all-important holiday shopping season.
“There’s no political intervention that’s going to get this done, and there may not be a human intervention that gets this done because this issue is now going to last well into next year,” said Steve Pasierb, the president and chief executive of the Toy Association.
For months, the White House has pooh-poohed concerns over inflation and supply, insisting that both would be momentary hiccups for the economy. Now, with a holiday-season meltdown staring them in the face, they’re suddenly taking a more active role. The Biden administration insists that they can’t do anything more than facilitate, but thus far they haven’t offered up any military or federal resources to help expedite unloading and shipping — presumably to keep from crossing the unions that work in those fields.
As for inflation, the Fed has stopped calling it “transitory,” the AP reported this morning:
The Biden administration has argued that higher inflation is temporary. Yet the supply chain issues have persisted months after the economy began to reopen and recover after vaccines lessened many of the risks from the pandemic.
Economists expect that Wednesday’s consumer prices report will show that prices climbed 5.3% from a year ago, significantly above the Federal Reserve’s 2% target. Atlanta Fed president Raphael Bostic said in a Tuesday speech that he no longer calls inflation “transitory” as he expects this current “episode” of inflation could last into 2022 or longer. …
Republican lawmakers have frequently blasted Biden’s $1.9 trillion coronavirus relief package for fueling higher prices. A recent analysis issued by the investment bank Goldman Sachs estimates that “supply-constrained goods” account for 80% of this year’s inflation overshoot, yet the political criticism continues to sting as housing and oil prices add to inflationary pressures.
Inflation and shortages … say, it feels like the 1970s all over again! And if Bostic is correct, That 70’s Show will last perhaps all the way to the 2022 midterms. At that point, we can expect a role reversal, with voters taking on the role of the Grinch and taking away Democrats’ roast beast dinner for Christmas 2022.