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The branch is still stuck on the Baltimore Bridge. Klumann is worried about supply chain inflation.

It’s been more than a week since the container ship Dali lost control and collided with the Key Bridge in Baltimore. It is still stuck in place and cannot move. The ship’s massive hull is blocking the port, closing the Port of Baltimore. still locked. How much impact will this have on the American economy?

2008 Nobel Prize Winner in EconomicskrugmanA New York Times op-ed article states that if a global pandemic occurs in late 2021 or early 2022,the supply chainWhen under extreme stress the effects can be severe. But this happened in 2024, and the severity seems to have been toned down; The total tonnage of the Port of Baltimore ranks only 17th among United States ports. Most of the cargo normally handled by the port can be sent to other ports on the East Coast for transportation, and is not daily The 2021 Ever Given blocked the Suez Canal.

The problem is that it’s not just the Port of Baltimore that’s in trouble. The Panama Canal has been affected by drought and its shipping capacity has been greatly reduced; The Houthis launched missiles to attack cargo ships traveling in the Red Sea and transiting the Suez Canal. These problems have left global supply chains less loose than last summer. Currently, the New York Federal Reserve’s closely watched “Global Supply Chain Stress Index” (GSCPI) is not flashing red warning lights as of winter 2021-2022, but it is clear that the situation worsened significantly since last August. Is. Year.

Klumann said that since the main reason for the increase in inflation in 2021-2022 is the disruption of the global supply chain, and now that the situation has worsened, he is “a little nervous.”

Review of inflation developments from 2021 to early 2024

July 2021,white HouseEconomists assess that the rise in US inflation is similar to the wave of inflation that began in 1946. The post-pandemic recovery period is similar to the initial period after World War II, with a backlog of demand and supply chain disruptions. The wave of inflation after World War II took about two years to subside and the unemployment rate did not remain high for long.

Now looking back, it can be said that the above analysis has hit the mark. The inflation cycle in the United States in recent years is exactly the same as after the war. The inflation trend in 2023 will resemble the trend of the late 1940s. Both have seen “spotless deflation”, that is, a rapid decline in inflation without a rise in the unemployment rate. Pessimists predicted that Federal Reserve (Fed) Chairman Volcker’s stagflation scenario (a sharp increase in interest rates would lead to an economic recession and then suppress inflation) in the early 1980s did not occur.

As for the official indicators showing mild inflation in January and February 2024, Klumann believes this largely reflects the so-called “January effect” (which actually covers January and February) – with many companies looking into the new year. Increases prices in the beginning. According to the judgment of the Fed and several independent economists, the slowdown in inflation is expected to resume in the coming months.

Supply chain pressures and the interaction between these pressures and demand largely explain why US inflation has remained above the Fed’s 2% target for the past few years, according to the latest analysis from White House economists.

Conversely, the model also highlights the main reason for the slowdown in US inflation from 2022 onwards: companies adjust and adapt to economic changes, and supply chain problems are reduced.

Inflation concerns revived due to supply chain disruptions

Klumann believes the above analysis makes sense and gives him confidence in the “soft landing” approach – in which inflation falls to acceptable levels and unemployment remains low – until recently.

If supply chain chaos is considered to be the main factor driving inflation in recent years, and the elimination of those chaos is the main driving force behind the recent slowdown in inflation, then one cannot help but see the consequences of further declines. Can worry about. Supply chain status.

Of course, today’s supply chain problems are not as bad as those of 2021-2022. Indicators from the New York Fed even show that supply pressure has been lower than usual recently, and there are many signs of a return to normal. The collapse of Daly’s Baltimore Bridge may have had a slight negative impact on inflation.

However, Klumann is not convinced that this is actually the case. Supply chain issues left him “troubled again”.

Finance(TagstoTranslate)Supply Chain(T)Kluman(T)White House

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