Product availability, or lack thereof, is as critical an issue as rising prices. The last time Americans saw this phenomenon was in the 1970s, with long lines at gas stations. Now, more than two years into the pandemic, generations of Americans at varying income levels are facing shortages in a much wider range of products. It is, in many ways, a new era of scarcity.
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Look at the housing market. There are few houses for sale. Real estate inventories are at historic lows. A recent open house for an 1,800 square foot townhouse in Alexandria, just outside DC, drew more than 100 people. It was an end unit that backed onto the trees, but the bathrooms, among other things, needed updating. In the end, 13 offers were received and the property, listed at just under $500,000, sold for $580,000. Stories abound of ever-increasing home values and prices, but as the real estate agent who sold this property told me, the key question is where will the other 12 bidders go, let alone the other 99 people who visited it.
Record number of US cities have home listings exceeding $1 million
The shortages extend beyond housing. Many families feel like they still can’t move on, even though they’ve been diligently saving during the pandemic shutdowns and landing better-paying jobs or raises. Part of the reason is that they want to buy things – houses, cars, dishwashers – but often can’t, even at exorbitant prices. Car inventories are at unprecedented levels, so people are paying more than the list price, but the color or model they want isn’t always available. Likewise, grocery stores and restaurants struggle to keep items in stock. Before the pandemic, the share of unavailable items on store shelves was typically around 5%. Most customers barely noticed it. Lately it’s been closer to 12-15%, sometimes worse.
“In many cases, Americans feel like someone else got there first. Someone with more money,” said Peter Atwater, president of Financial Insights.
Americans aren’t used to this kind of shortage, and it adds to the frustration that politicians have spent much of the past year saying supply chains will be fixed “soon.” Instead, the problems keep coming: as varied as baby formula shortages, Russia’s war in Ukraine triggering a food supply crisis, and China’s Covid-19 lockdown shutting down factories and delaying shipments. It now takes manufacturers an unprecedented 100 days, on average, to obtain materials – the longest on record since the industry began tracking in the late 1980s.
Manufacturers have less than five days supply for some computer chips
Some blame the media for Americans’ gloom, arguing that journalists focus too much on the negatives such as high prices and the latest market turmoil. But reporters also extensively covered the good jobs news, including the fact that this jobs recovery is Faster than after the recessions of 1990, 2001 and 2007. Yet until supplies return to more normal levels, Americans are unlikely to feel much better.
Meanwhile, Americans have been prepared to focus on the negatives. The past two years have been a time of massive chronic stress as communities feared the coronavirus and had to follow ever-changing advice for workplaces, schools and even family gatherings. This kind of sustained stress makes people more likely to focus on negative news, psychologists say.
“Once we think the economy is doing badly, the information we tend to seek out and the evidence we remember reinforces that belief,” said Anne DePrince, professor of psychology at the University of Denver. “It reinforces the idea that we are not in control.”
Much of daily life remains out of control. Consider: Americans were told that vaccines would largely control the pandemic. Then, last summer the delta wave hit. Then came the failed US withdrawal from Afghanistan. Then omicron. And now the war in Ukraine, plus yet another variant floating around. Challenges abound to reopen schools and daycares. There are still no vaccines for children under 5, and the return to the offices remains chaotic.
As long as the drama keeps coming, people will continue to feel a lack of control over their lives and their options.
What can the White House do? President Biden cannot magically bring dishwashers back into stock or create a flurry of homes for sale. But the president can once again focus on supply issues and talk frequently about what his team is doing to address them in the short and long term, much like he did during the holiday shopping season. The release of oil from the Strategic Petroleum Reserve was a good start this spring. It will also be essential to ensure that the main ports on the west coast do not close this summer during the negotiations of the collective agreement.
There is good economic news, but until Americans can easily get what they want, too many people will still feel like they can’t get ahead.