Bottlenecks and strong demand have rekindled inflation. Based on the November CPI, price increases for new cars, men’s apparel and furniture hit record levels.
But assuming supply-demand imbalances will continue, and then they don’t, is common. Pig/cattle breeders often respond to high prices with more production, which leads to gluts and big price drops. A similar dynamic applies to shipbuilding/ship prices. And lumber prices were surging in May, now have fallen by more than half.
Automakers have parked lots of partially built vehicles around the country which will flow to dealers when chips are added. Precautionary building of stockpiles might be worsening shortages and painting a false picture of underlying demand. And reduced COVID risk in the months ahead could reduce demand for goods and help improve supply chain snarls.
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Learn more here: https://www.wsj.com/articles/todays-shortages-could-soon-become-tomorrow-s-gluts-11637580600