The Chip Shortage Was the Canary in the Coal Mine
The economy is in a strange place right now. One can confidently and accurately point to data suggesting the economy is in a good position in terms of customer demand, unemployment, wage gains, and household saving rates. At the same time, however, problems such as unfilled jobs and inflation suggest a perilous state.
When it comes to the good news, people have disposable income and are willing to spend it on goods. The demand picture is so strong that the supply chain infrastructure that was supposed to handle such demand has come to a halt. This brings us to the bad news, which includes signs of higher inflation. For the past 25 years, inflation has been mostly a nonfactor for people in the U.S. It’s one reason why we aren’t seeing as many news articles and online commentary as the topic deserves. Most people in a position to write such stories are too young to have experienced inflation exceeding 200 to 300 basis points. There is little to no recognition that inflation can single-handily destroy an economy (and society).
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