Global supply chain issues impact U.S. economy (2023)


The global supply chain is struggling to recover from the pandemic and its woes are hitting the U.S. economy. New York Times global economics correspondent Peter Goodman joins CBSN's Tanya Rivero for more on the story.

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The, global supply chain is struggling to recover from the pandemic.

As we approach the holiday shopping season stores are running short on products.

And companies are paying higher prices to manufacture goods.

Consumers are eating that cost paying higher prices at gas pumps.

And in grocery stores.

And there appears to be, a consensus supply chain issues are not going away anytime soon and may get even worse for more on this.

I want to bring in new york times global economics correspondent.

Peter goodman peter is the author of the upcoming book, davos man, how the billionaires devoured the world can't wait to read that one and talk to you about the billionaire tax, but that's a separate story.

Peter, welcome.

Great to have you here.

Did supply chain issues begin during the pandemic or was were the issues already there before and the crisis just made it worse, um, we've definitely had supply chain issues in the past.

I mean, we had them after the fukushima disaster in japan after a big earthquake in taiwan in 1999.

So we've known that a lot of manufacturers have been operating very lean you.

Know? They they make as little as possible, they wear house as little as possible because a dollar that you spend, you know sticking auto parts or computer chips in a warehouse.

So you've got them in case.

Something happens in the supply chain is a dollar that you can't use on dividends for shareholders or bonuses.

For executives there's been this tendency toward lean, but there's.

No question that the pandemic is, you know, an extraordinary maybe unprecedented test for the global supply chain.

And it certainly has made a pre-existing problems, uh, very very apparent and and serious all right.

So in your research on the topic.

And by the way, our supply chain issue is going to be your new major beat or is this what you're going to be covering from now on, uh, I'm going to spend a good part of next year, digging into global supply chain issues.


I mean, this is clearly not going away good.

I mean, yeah, no it's, very very serious.

And you know, you say that pre covid shipping a container from shanghai to los angeles cost about, you know, two thousand dollars.

A retailer can definitely handle that by early 2021, the same trip cost about 25 000.

So how are companies responding to these price hikes? Are they absorbing it? I mean, obviously they're passing some of it on to the consumer.

But but how are they processing this? Well, it really depends upon how much money a company's got.

So you know, a giant company like amazon is looking to buy airplanes, uh, large, retailers like target and home depot are in some cases, chartering their own ships, because you know, it's, not just this incredible price spike and the cost of shipping it's also that if you're a smaller player, you have a difficult time getting your container on a ship contracts in the shipping industry are notoriously, uh, vague.

They give the shipping companies all kinds of latitude to say, well, we know we said, we would take your container from shanghai to la, but we're not going to do it.

We can't do it so you'll have to basically fend for yourself and bigger companies can fend for themselves.

Smaller companies don't have money to charter their own ships.

So in in many instances, uh, what we see is a reinforcing of the power of larger companies that are able to deal with this.

So how much is this backlog or this? These supply chain issues affecting the us economy and ask because a new commerce department report reveals that the u.s economy slowed to a two percent annual growth rate between july and september, and this growth fell below expectations and well, below the second quarter growth rate of over six percent so is that is this.

This is all connected right? And does this mean that it will continue to get worse.

Well, there's, no sign of it.

Getting better.

Nobody really knows how long this will last uh or or when better days come, but there's, no question that a lot of companies are dealing with serious issues in the supply chain.

You know, if you're a paint manufacturer, and you can get 26 of the 27 chemicals you need to make your product.

But one of them is stuck on a container ship off of southern california, waiting for a chance to to unload at a wildly overcrowded port.

Well, you can't make paint, and that means that somebody wants to buy paint, uh to do a job at somebody's house, or in a larger construction project is going to face delays too that is a break on overall economic activity.

And that does seem to be a factor in the u.s economy slowing along with other factors, like, you know, consumers may be losing their appetite for spending in many instances, a lot of people don't have money to spend because uh emergency unemployment, benefits have expired, uh, moratoriums and evictions have expired.

So a lot of people are now facing a crisis that was made much less, uh, severe at least for a time by emergency programs that are gone.

And a lot of people are reeling and not in a position to spend right so how much? Uh, you know, do we the american consumer now have to shift our expectations? Because you pointed out we're so used to just sort of like pressing a button on a computer.

And in two days, the exact thing that we want arriving at our doorstep, you know, now we might not be able to have as you point out the color of car we want, or we may not be able to get everything that we want so easily.

So is there a certain? You know, expectation that has to be adjusted? Yeah, I think that is happening.

I mean, not just for for households, but for businesses, too.

I mean, companies that have taken shipping for granted, uh, as just, you know, I've talked to, um, uh companies in the apparel industry who built, uh businesses, where they design their stuff in the states.

They go use a network of factories from from east asia to southeast asia to south asia to make their stuff, uh.

And then they just count on it being seamlessly possible to get their stuff across oceans when they need it they're.

Now, uh, really re-examining that model.

And I think at the household level, we're all getting a lesson.

And I mean who was talking about supply chains a year ago.

I mean now, this is like a conversation you can have in a bar with somebody because we're talking about supply chain, supply chains and the squid game.

Right? I mean, okay, everyone's, uh, all right? Well, peter, goodman.

Thank you so much.

We appreciate you sharing your excellent reporting with us.


How did the supply chain issue affect the economy? ›

Global supply chain disruptions due to the COVID-19 pandemic have increased the costs of trade between countries. Given the interconnectedness of the U.S. economy with the rest of the world, higher trade costs can have important impacts on U.S. labor markets.

How have issues with the global supply chain impacted the economy and lives of Americans? ›

While most consumers never had to think about supply chains, the current supply chain crunch is having an outsized impact on families across the country. American consumers have felt the consequences through inflation and higher prices, smaller quantities of available goods, and longer wait times for purchases.

Why is the United States economy having supply chain issues? ›

While the supply chain shortages started with COVID, they're also due to increased consumer demand, which was fueled by the federal stimulus checks that we probably didn't need to keep the economy recovering. We just didn't understand how consumer demand was going to shift, once the pandemic began to ease.

What is the impact of global supply chain issues? ›

Driver shortages, logistics provider capacity issues, inflation, shipping delays, increased freight costs, depleted inventory levels, labour shortages and demand peaks are driving discussions and require attention.

Did supply chain issues cause inflation? ›

“With production delayed due to a lack of available chips, the supply of vehicles dropped and prices rose.” Higher costs for new and used cars were another major contributor to the rapid increase in the overall inflation rate.

How does supply affect the economy? ›

It's a fundamental economic principle that explains when supply exceeds demand for a good or service, prices fall. When demand exceeds supply, prices tend to rise.

How has the American economy been impacted by globalization? ›

The first of the three effects of globalization on the U.S. economy was the growth of multi-national corporations. Corporations were able to merge into other countries and reaped the many advantages and perks, such as increased bottom lines, cheaper labor, and relaxed regulations.

What are the 3 global supply chain issues? ›

Among the most common supply chain challenges in 2021 and 2022 were things like port congestion, manufacturing delays, and extreme weather events (including hurricanes, tornadoes, wildfires, and more).

How has globalization changed supply chains for the United States? ›

Globalization has meant that consumers can get goods more cheaply from countries with low labor costs or high technology usage. Increased globalization is therefore like an increase in the supply of goods and, to a lesser extent, services. That increased supply means lower prices, all other things being equal.

Does the US still have supply chain issues? ›

Supply chain issues impacting the industry are expected to continue through 2023. Get ahead of these top five issues to lower your supply chain risk. Are you sick of hearing about supply chain disruption yet? Three years after the start of the pandemic, disruption rages on, and it's not going anywhere anytime soon.

Is the US having supply chain issues? ›

During 2022, more than 4 in 5 organizations experienced at least one significant supply chain disruption, and 50% experienced three or more. With continued or worsening conditions, consumers should prepare for sustained impact on essential items.

How can we fix supply chain problems in the US? ›

Six Ways to Deal with Supply Chain Problems
  1. Use Tools to Boost Efficiency. Supply chain issues highlight a lack of efficiency in getting products into consumers' hands. ...
  2. Form Relationships with More Suppliers. ...
  3. Make Product Changes. ...
  4. Add to Inventory When You Can. ...
  5. Improve Customer Service. ...
  6. Communicate.

Why the global supply chain is getting so much worse? ›

The surge in demand for finished goods at a time when supply was severely limited in part due to pandemic-related labor shortages and shutdowns —notably of cities, factories and manufacturing hubs in China — knocked the global logistics system out of whack.

Why is supply chain important in the global economy? ›

Supply chain management keeps the mechanisms of supply and demand operating smoothly so that people have access to goods and services. From sustenance and shelter to the way we work and entertain ourselves, a well-oiled supply chain is critical for maintaining economic stability and a functioning society.

What is causing supply chain issues 2023? ›

The pandemic-era demand for goods has shifted to an excess supply, and those goods have ended up stuck at port with nowhere to go. With the swing of supply and demand, the container shortage of 2021 and 2022 has given way to a warehouse capacity shortage that will undoubtedly cause supply chain issues in 2023.

What is causing the US inflation? ›

As the labor market tightened during 2021 and 2022, core inflation rose as the ratio of job vacancies to unemployment increased. This ratio is used to measure wage pressures that then pass through to the prices for goods and services. As workers bargain for better pay, firms begin to increase prices.

Is America in inflation right now? ›

US Inflation Rate is at 4.05%, compared to 4.93% last month and 8.58% last year. This is higher than the long term average of 3.28%.

How are the global supply chain issues and rising US inflation linked? ›

Inflation in the supply chain can cause a ripple effect on prices, causing supply chain costs to rise, which causes more inflation and increased prices.

How does supply and demand affect prices in the US economy? ›

Key Takeaways

The law of demand holds that the demand level for a product or a resource will decline as its price rises, and rise as the price drops. Conversely, the law of supply says higher prices boost supply of an economic good while lower ones tend to diminish it.

What economy is affected by supply and demand? ›

In the economic system of a market economy, the law of supply and demand is important. Supply and demand affect prices from vendors in your supply chain which will, in turn, impact your product costs. Higher prices for elastic goods may result in a lower sales volume.

How does supply affect inflation? ›

To summarize, the money supply is important because if the money supply grows at a faster rate than the economy's ability to produce goods and services, then inflation will result. Also, a money supply that does not grow fast enough can lead to decreases in production, leading to increases in unemployment.

Does globalization help or hurt the US economy? ›

In general, globalization decreases the cost of manufacturing. This means that companies can offer goods at a lower price to consumers. The average cost of goods is a key aspect that contributes to increases in the standard of living.

Why is the US economy so strong? ›

There are two things that matter to an economy in the long term: the size of its workforce and the productivity thereof. A higher fertility rate and a more open immigration system have long given America a demographic advantage over most other wealthy countries, and that continues.

How is the US economy doing? ›

Relative to pre-pandemic trends, economic output continues to fall short. However, the United States has performed better than other G7 economies (and the Euro area) with real GDP just 1.4 percent below trend. The fast recovery in the United States reflects a more complete recovery in domestic consumption.

Is there really a global supply chain issue? ›

In 2021, supply chain disruptions cost businesses worldwide an average of $184 million annually — in the U.S. it is estimated at $228 million.

What is global supply chain disruption? ›

A supply chain disruption is any event that causes a disruption in the production, sale, or distribution of products. Supply chain disruptions can include events such as natural disasters, regional conflicts, and pandemics.

What are the biggest factors affecting global supply chains? ›

Economic markets and specifically inflation, geopolitical and trade risks, and the changing global health situation will all impact supply chains.

Is the increasing globalization of business good or bad for the United States? ›

Globalization has a positive impact because it enables the US to increase trade in services, manufacturing, agricultural and food products, it enables Americans to buy cheaper and more abundant consumer goods, and it creates more U.S. jobs.

What is the biggest supply chain issue in 2023? ›

Volatility remains the watchword for supply chain operations in 2023. Amid inflation, uncertain consumer demand, labor shortages, disrupted logistics and extreme weather, supply chain managers are restructuring operations and reinforcing digital controls to add flexibility and manage risk, while holding down costs.

What is US supply issue? ›

What's causing America's supply chain issues? A worker shortage and high demand are causing delays. As the U.S. economy struggles to fully recover from the coronavirus pandemic, supply-chain disruptions across the country are driving up prices and leading to a growing shortage of goods.

Is there a food supply shortage in us? ›

Q: Will there be food shortages? A: There are currently no nationwide shortages of food, although in some cases the inventory of certain foods at your grocery store might be temporarily low before stores can restock.

Will there be food shortages in 2023? ›

Food inflation: Cost of groceries rising at a slower rate

It was a bad year for food shortages in 2022, with categories including eggs and baby formula hit hard. Unfortunately, 2023 could see its own batches of food shortages.

Why are there so many shortages right now? ›

The FDA says manufacturing quality issues are the major reason for drug shortages, but production delays in manufacturing are also to blame. Delays in receiving materials and components from suppliers are causing manufacturing issues. Discontinuations are another factor contributing to shortages, the FDA said.

What is the current state of the global supply chain? ›

The index peaked in December 2021 and has since come back down, suggesting the supply chain is on its path to moderating although still elevated by historical comparison. The most current reading in January 2023 was 0.94, down from 1.19 in December.

How long will global supply chain issues last? ›

Most supply chain managers expect problems to continue at least through 2024. More than half of logistics managers surveyed by CNBC do not expect the supply chain to return to normal until 2024 or after. The dour outlook comes after almost three years of global supply chain problems.

What is causing global supply chain bottlenecks? ›

There have been a few key drivers of supply chains disruption. Strong US durable goods consumption relative to normal, supported by significant fiscal stimulus, outstripped the recovery of global supply capacity. Disruption to global shipping resulted in sharp increases in shipping costs.

Who benefits from global supply chain? ›

Lower costs: Global supply chains allow businesses to take advantage of lower costs associated with foreign markets. Companies can source materials from countries with cheaper labor and production costs, resulting in more cost-efficient operations.

How much does supply chain contribute to the economy? ›

The U.S. supply chain economy is large and distinct. It represents the industries that sell to businesses and the government, as opposed to business-to-consumer (B2C) industries that sell for personal consumption. The U.S. supply chain contains 37% of all jobs, employing 44 million people.

How bad is supply chain crisis? ›

The supply chain crisis is a major contributing factor in the 2022 United States infant formula, the tampon shortage and various drugs shortages. In December of 2022, it was reported that global demand for commercial jet aircraft far exceeded supply, with Jefferies Group reporting a backlog of 12,720 aircraft.

What is time to survive in supply chain? ›

Time-to-survive refers to the amount of time it takes for your business to resume your supply chain operation after a disruption.

What is the top supply chain issue for the future? ›

What is the top supply chain issue for the future? The top issue for CSCOs is achieving agility and resilience through four supply chain organizational priorities: commercial growth; authentic fulfillment of ESG commitments; real-time execution; and flexible work experiences.

What is the problem with the United States supply chain? ›

A lack of sufficient, reliable transportation/shipping capacity (28%) Continued shortages of critical parts or other goods (33%) Uncertainty in customer demand (27%) Cost and logistical challenges of implementing new supply chain design, contingency planning, and/or technology solutions (28%)

How has the global supply chain benefited the world economy? ›

These complex networks of supply chains have contributed to increased stability and prosperity worldwide. They have opened new markets, transforming relationships between the developed and developing world and making supply chain resilience critical to sustained global economic growth.

How can the supply side of the economy cause inflation? ›

Supply shocks: Inflation often happens because of supply shocks — major disruptions to an important economic input, like energy. For example, if a lot of oil fields stop producing oil because of a war, the price of energy increases.

How important is the global supply chain? ›

Diversifying a supply chain to operate on a global scale gives you access to a wider market, presenting the possibility of finding the best-cost materials.

What is the global supply chain Why is it important? ›

The global supply chain is important as it creates business efficiencies and cost savings. By cutting costs on product development through less expensive labor, technology, or resources, businesses have greater capability to expand and enter new markets. Amongst the benefits of a global supply chain is lowered costs.

How can we solve the supply chain crisis? ›

In this paper, I outline six ways to improve global supply chains:
  1. Boosting domestic production through on-shoring and near-shoring.
  2. Easing transportation jams.
  3. Prioritizing public health.
  4. Managing labor shortages.
  5. Fighting anti-competitive practices.
  6. Mitigating geopolitical tensions.
Jul 12, 2022

What is an example of a global supply chain? ›

For example, if a company sources raw materials in China, manufactures the product in India and sells it to customers in North America, its supply chain is global.

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