Supply-Chain Backlogs May Never Clear as Long as US Consumer Demand is High

[Frodo]

President Biden's re-election prospects are screwed if this proves to be true:

Supply-chain backlogs may `never’ clear as long as U.S. consumer demand persists, says RBC Capital Markets

[Bootes Void]

It’s kinda ridiculous to claim that the supply chain backlogs will never fix. It obviously would at some point

[they don't love you like i love you]

If you went back in time 50 years ago and asked if things like the power grid or resources distribution or the supply chain at the time would be sufficient to handle the current population, the answer would be an obvious "absolutely not." But it did work because our capabilities also increased with population. The assumption of the topic headline is that our current port capabilities and infrastructure will remain the same forever, which is obviously an absurd notion.

“If demand for goods remains elevated in perpetuity, the Ports of Los Angeles and Long Beach will never fully clear the logistical hurdles required to untangle the supply chain,” and “the supply chain will never normalize, barring significant infrastructure investments,” they wrote.

Good thing we just passed a significant infrastructure investment then!

[Former President tack50]

unless the consumer shifts significantly and `cannibalizes goods spending with services,'

...hardly an unimaginable contingency over these next few months!

The report, like many others, identifies the ports of Los Angeles and Long Beach as the relevant choke points. It's amusing to imagine the land development policies of wealthy coastal states precipitating a revival in American manufacturing simply because there isn't enough capacity to move foreign goods through them.

Wouldn't the "path of least resistance" involve just expanding those ports (or possibly building a new port somewhere) instead over the full revival of American manufacturing?

[StateBoiler]

Are there any potential harbors in Oregon or Washington State that could be developed or enlarged?

[StateBoiler]

If you went back in time 50 years ago and asked if things like the power grid or resources distribution or the supply chain at the time would be sufficient to handle the current population, the answer would be an obvious "absolutely not." But it did work because our capabilities also increased with population. The assumption of the topic headline is that our current port capabilities and infrastructure will remain the same forever, which is obviously an absurd notion.

“If demand for goods remains elevated in perpetuity, the Ports of Los Angeles and Long Beach will never fully clear the logistical hurdles required to untangle the supply chain,” and “the supply chain will never normalize, barring significant infrastructure investments,” they wrote.

Good thing we just passed a significant infrastructure investment then!

But how long until you see the results of that, 5 to 10 years at best? A hypothetical new port in Oregon if you decided to build today at breakneck speed would be at least a decade before you could probably ship anything through there.

"as long as U.S. consumer demand persists" - i.e. stop the helicopter drops, raise interest rates to reduce U.S. consumer demand, and the supply chain goes back to normal

[Make America Grumpy Again]

Either Biden needs to start a massive public works project or if he doesn't want to do that, at the least reroute everything to Florida or Texas where they are open.

[Indy Texas]

Demand is exceeding supply because:

1. Fiscal and monetary policy for the past two years has been firing money out of t-shirt cannons.

2. The pandemic has made consumption of certain services less desirable (going to a concert or getting a haircut in a salon) or less necessary (buying lunch from the restaurant near your office that you never go to anymore because you WFH).

Because Americans love to CONSUME, rather than that demand for services just going away, it gets shifted toward demand for goods. People want to spend the money on something. Sometimes it's a more direct substitution (instead of a gym membership, you bought fitness equipment to use in your home; instead of meals out at restaurants, you bought some new kitchen gadgets to do more cooking), sometimes it's not (people buying a bunch of random crap on Amazon and from big box stores because they're bored or stressed out and think more stuff is going to make them feel better).

This isn't going to normalize until the pandemic is really "over."