The Rough Road back to “Normal”

It may not seem like it right now but we are on a path back to something that hopefully resembles “normal” and what’s happening right now is the painful lag that always happens when there has been dramatic societal change.

At the root of all this current pain is of course, the Coronavirus. After more than a year of dealing as best we can with a unique and dangerous virus, we are now dealing with our economy and society struggling to “bounce back” and we have issues with overcorrection, bureaucracy and the human thirst for life to return to normal.

What’s happened that’s most immediate and dramatic is the human response to signs our economy is finally reopening. When people see signs that things are looking up, we feel energized and our needs are immediate, while the ability to fill those needs requires getting a multi-trillion-dollar economy back up to speed and there is a painful lag between the two which is what we are experiencing now, namely:

Demand has increased dramatically.
Supply has been hobbled by having to greatly scale down during the pandemic just to survive.
Getting supply even close to what it used to be is difficult because a lot of infrastructure support was permanently damaged and in too many cases, destroyed by overreaction to the pandemic.
Bringing workers back to work has been ambushed by well-intended but overly generous unemployment benefits.

The basic laws of economics cannot be repealed...

When demand is high and supply is low, prices go up, and food and energy, being basic commodities are always the first.

The prices of Beef, Pork and Poultry are surging upward because of processing plants first being hit with the virus and now a labor shortage due to overly generous unemployment benefits which are disincentivizing workers to return.

Food prices overall are surging upward and in some cases, the supply simply isn’t there no matter what people might be willing to pay.

The rising cost of energy of course, compounds the problem as everything we consume has to be delivered by truck and those trucks require fuel so the cost of transportation further drives up the cost of food.

But there is good news! It’s a virtual certainty that the price increases we’re being hit with now are only temporary, (let’s hope!). Workers WILL be coming back to work, the supply chain WILL be replenished and once again, another fundamental law of economics is that when supply is plentiful, prices drop...

Let’s keep our fingers crossed for a short supply/demand correction!