Steel, lumber, plastic and fuel. Corn, soybeans, sugar and sunflower oil. Houses, cars, diapers and toilet paper. Prices are rising almost everywhere you look.
The post-pandemic recovery is in full swing and the global economy is struggling to keep up. Following a collapse at the start of the pandemic as businesses closed and millions of workers lost jobs, demand has rebounded with a vengeance, spurred by government stimulus and consumers flush with savings.
But companies that idled factories or put workers on furlough during lockdowns are now unable to secure enough raw materials to build the houses, make the cars or assemble the appliances that are suddenly in high demand.
Companies are furiously trying to restock inventories following last year’s global recession, straining supply chains already reeling from the pandemic to breaking point. A shortage of shipping containers and bottlenecks at ports have made matters worse and increased the cost of moving products around the world. Throw in accidents, cyberattacks, extreme weather and the huge disruption caused by the desperate hunt for cleaner sources of energy, and you have a perfect storm.
There’s no telling how long demand will outpace supply, especially as the pandemic continues to rampage through some of the world’s biggest economies. But there have already been shortages of everything from microchips and chicken to chlorine and cheese, and prices are spiking.
The debt of US nonfinancial businesses had already surged in recent years, but when the Pandemic hit, businesses went on a borrowing binge as the Fed has repressed interest rates to record lows even for the riskiest corporate borrowers.
These debts of nonfinancial businesses – including corporations and businesses that are not incorporated – jumped by 9.1% year-over-year to $17.7 trillion in Q4 2020, according to the Fed’s Financial Stability Report. This amounts to 82.4% of nominal GDP. The Fed has been ruminating in its financial stability reports about the risks posed by corporate debt.
These debts are from nonfinancial businesses and exclude banks, nonbank lenders, insurance companies, and other lenders because lenders borrow and then lend, and including their debts would lead to some double-counting.
But what is happening in the USA pales compared to what is happening in some other countries, such as the corporate tax havens and financial centers of Luxembourg, Ireland, and Hong Kong, and of course in China, according to the data released today by the Bank for International Settlements (BIS) for Q4 2020. It leaves the USA in ignominious 22nd place!
In an interview a few days ago that aired locally, the owner of an Italian restaurant in San Francisco – the restaurant scene is now vibrant in a different way than before – put her struggles with hiring on the table. The kitchen staff had come back, she said, but she had trouble hiring back the staff for the front of the restaurant, the wait staff, who are normally fairly well paid via tips.
She said that many of these people have other dreams. They were artists or writers or students or entrepreneurs, or whatever, and waiting tables wasn’t their career, it was just a way to make ends meet. And many of them had moved on during the pandemic or were using their unemployment benefits to push their dreams forward, rather than returning to restaurant work.
Employment in food services and drinking places rose by 186,000 in May from April, according to the Bureau of Labor Statistics today. In the leisure and hospitality industry overall – which also includes hotels and casinos – employment jumped by 292,000 in May, and has been gaining all year as restaurants and hotels reopened, but was still down by 2.5 million people compared to the peak in February 2020.
Every restaurant owner has their own struggles. Pay raises are being implemented to bring people back, including at big chain restaurants. But what the owner of the Italian restaurant said was that for her, hiring waitstaff, who earn substantial tips, was the difficulty; and that her kitchen staff, the hourly employees, were largely back at work. Which makes the whole story a lot more complex.
Then there is manufacturing. The complaints from manufacturers about the difficulties of hiring have been circling for decades, as the industry is requiring ever more sophisticated labor because automation is playing an ever-larger role.
But now, in addition to the difficulties of finding the right kind of labor, manufacturers are deeply tangled up in supply-chain issues and being able to get components, raw materials, and supplies in time, with lead-times blowing out, putting a damper on what they could manufacture, and on the labor they could employ if they got everything they needed.
Every crisis has incentivized manufacturers to cut costs by investing in automation or by offshoring production. Manufacturing employment peaked in the 1970s and has since fallen by about one third.
AMAZING photos show daredevil sun worshippers taking a dip in the world’s first floating sky pool – 115 feet above the ground.
Swimmers with a head for heights waded into the glass-bottomed London pool as temperatures soared.
Architects fitted the pool between two blocks of luxury flats in Nine Elms.
And anyone brave enough to take a swim would have had uninterrupted views to the ground from the 10th floor.
The 82ft pool holds 400 tons of water – and it’s got some of the best views in the capital.
Brits practising their butterfly stroke will be able to see for miles around, with the billion-dollar US Embassy, the Houses of Parliament and the London Eye all within sight.
The pool was shipped 5,000 miles from Colorado in the US.
It’s connected to the Embassy Gardens’ Legacy Buildings on either side using technology that allows it to move in high winds.
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The day after Independence Day in the U.S., Jeff Bezos will give up the day-to-day reins of the now-colossal company he founded nearly three decades ago.
Bezos, speaking Wednesday at Amazon’s annual shareholder — his last as CEO — announced that he will step aside as chief exec on July 5, whereupon Andy Jassy, who is currently CEO of Amazon Web Services, will take over the role.
Amazon had previously announced the CEO transition plan. Bezos isn’t going to stray very far — he will remain involved in major decisions at the company as executive chairman.
“I’m very excited to move into the exec chair role where I will focus my energies and attention on new products and early initiatives,” Bezos said.