Materials Squeeze Drive Prices Higher

Issue 69

In recent months, several events have taken place that have greatly affected the supply chain and resulted in global shortages for numerous products such as construction materials and electronics.  The result of these shortages is an expected increase in price by up to 20%.

After the Suez Canal blockage in March, as well as the global chip shortages associated with the drought in Taiwan (which is the leading chip producer in the world), products across the spectrum have been at a shortage and are expected to continue to be for years to come.  Intel has begun discussing the increased manufacturing of chips to ease the shortage, and the housing industry is requesting the White House push for tariff relief to obtain cheaper supplies.

The construction industry is particularly worried as the price of lumber has nearly tripled in the past year due to record demand in the housing market and supply chain squeezes on materials production as a result of the COVID-19 pandemic.

This may also cause problems for the White House’s multi-trillion-dollar infrastructure plan.  If prices for building materials continue to rise, the infrastructure investment which is planned to build roads, bridges, and electric vehicle charging stations, will only become more costly.

Much of the price increases in recent months have been attributed to the economy reopening as the Covid-19 pandemic comes to a close, and the federal government does not expect the rise in prices to be a long-lasting issue.  However, as widespread supply chain shortages continue to plague most forms of manufacturing, without any real solution in sight, it is possible for price increases to remain for the foreseeable future.

Source: New York Times