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Illustration: Aïda Amer/Axios

American consumers and businesses face an array of shocking shortages in 2021 — the result of corporate miscalculations in the early days of the pandemic. The shortages range from labor to lumber to rental cars.

Why it matters: As vaccinations rise and the economy grows back to its pre-pandemic size, Americans are tantalized by the prospect of the country reverting to something approaching the familiar old normal. While that might happen eventually, it could take a surprisingly long time for a new equilibrium to establish itself.

  • Until then, expect a constant stream of headlines about supply being unable to meet demand across a large range of industries and sectors.

The big picture: Shortages have appeared in multiple areas.

  • In lumber, high prices are a consequence of the decision by sawmills to shut down production a year ago, in anticipation of an economic slump.
  • In auto, high prices reflect decisions by chip manufacturers early in the pandemic to concentrate on making semiconductors for consumer electronics — which were expected to boom — at the expense of making chips for vehicles, which were expected to be hit hard by the broader slump in travel.
  • In the restaurant industry, which is struggling to find workers, experienced servers found themselves with almost a year to find other jobs with better job security and fewer health risks.
    • In expensive cities like New York, many simply left town. Hiring was generally not easy even before the pandemic, and it's much more competitive now that so many restaurants are trying to staff up aggressively at exactly the same time.

Be smart: These shortages don't mean the economy is overheating. If anything, they mean it isn't yet hot enough. As industries like sawmills, semiconductor fabricators and restaurants grow out of their recession slump, supply will increasingly meet demand and prices will more likely to go down than up.

  • In an advanced economy, supply chains and lead times can be extremely long and complex, even for seemingly simple items like lumber. Disruptions to global shipping — an industry that has never been nimble — only make it harder to get back to normal.
  • Rebuilding those supply chains for a reconfigured economy, and finding the new natural state of dynamic equilibrium, is extremely difficult and time-consuming.
  • Pockets of sticker shock on things like rental car prices are therefore likely to remain for at least the rest of this year.

The bottom line: If price rises in a certain items are caused by temporary shortages, then the inflation is also likely to be temporary.

Go deeper

Demand for rental cars booms

Illustration: Rebecca Zisser/Axios

The rental car scramble — and the leap in prices — is a huge consumer headache, but it's paying off for car rental companies.

Why it matters: The pummeled industry is staging a stunning comeback, thanks to pent-up travel demand and increasingly hard-to-find rental cars.

Dion Rabouin, author of Markets
May 5, 2021 - Economy & Business

The new housing bubble

Illustration: Aïda Amer/Axios

Today's mortgage market is much more regulated and has much stronger fundamentals than during the housing bubble of the mid-aughts, but it's not a story that's as simple as rising demand and low supply.

What's happening: Unlike the environment ahead of the 2008 crash, housing prices are not being driven higher by a raft of underqualified borrowers getting mortgages they can't afford from unscrupulous banks.

Global shipping cashes in on pandemic demand

Illustration: Brendan Lynch/Axios

Consumer demand for goods grew voraciously during the pandemic, providing the perfect springboard for shippers.

Why it matters: The pandemic impacted services and goods economies disproportionately, and the recovery looks to be just about as uneven.