In college, I took my first economics class. I loved it. It just made sense, particularly the law of supply and demand. Simply put, if the demand outweighs the supply, prices go up. We are seeing this right now, particularly in consumer products.
When I worked in the garment industry, we did business with Walmart. They wanted what they wanted and figured out how to get it no matter what. It wasn’t a great way to do business. Regardless, their customer wanted to pay almost the same cost of the material and labor of an item, leaving zero for profit margin. Oh, and keep in mind they also wanted it made in America.
Spoiler alert, Americans can’t survive on the same hourly wage as people in China or Vietnam. Sad but true. Even Italy got hosed when all their beautiful ceramics began being knocked off in Chinese factories. What happened during that time is we began making massive amounts of product in other countries. Americans want to have their cake and eat it too, but it isn’t possible.
Fast forward, we have a global pandemic, and the supply chain becomes a nightmare. At the same time, we have almost 40% of Americans anti-trade. The red hat, Make America Great, is about keeping everything here. The reality is, immigration is the cornerstone of our country. The majority of products being made overseas are what we wear on our backs and put in our homes. The supply chain has been disrupted by COVID and also by the last administration.
Now we find ourselves with a lack of supply and plenty of demand. Until we all get vaccinated and realize that we have been and need to be a global trading world, we will see inflation in the short term and possibly longer.