The supply chain nightmare is a cost-cutting scam

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The supply chain nightmare is a cost-cutting scam

The supply chain nightmare is a costly cost-cutting scam that will cause consumers to increase prices and slow economic recovery. Unfortunately, Moody's Analytics warns supply chain disruptions to get worse before they get better. As global economic recovery continues to gather steam, what is becoming apparent is how it will be stymied by supply chain disruptions that are now appearing in every corner Moody's wrote in a Monday report.

Indeed, the IMF sent out an update on Tuesday of its 2021 economy forecast for the United States of America: one percentage point; the most for any G-7 economy). The IMF cited supply chain disruptions and weakening consumption — which itself has been partially driven by supply chain bottlenecks such as a lack of new cars in the computer chip shortage.

Border controls and mobility restrictions, pent-up demand from not able to fetch a worldwide vaccine pass, and unavailability of a global vaccine pass have combined for a perfect storm where global production will be hampered because deliveries are not made in time, costs and prices will rise and GDP growth will not be as robust as a result, Moody's wrote in the report.

Moody's said the weakest link may be the shortage of truck drivers — an issue that has caused congestion at ports and contributed to gas stations in the United Kingdom to run dry. Unfortunately, Moody's warned that there are dark clouds ahead since several factors make overcoming the supply constraints particularly difficult. The firm pointed to differences in the countries fighting Covid, with China aiming for zero cases while the United States is more willing to live with Covid - 19 as an endemic disease. This presents a serious challenge to harmonizing the rules and regulations by which transport workers move in and out of ports and hubs around the world, wrote the analysts. Grocery shelves aren't going back to normal this year Secondly, Moody's cited the lack of a concerted global effort to ensure smooth operation of the worldwide logistics and transport network. Others are much more optimistic about the supply chain outlooks. JPMorgan Chase chairman Jamie Dimon said Monday that these supply chain hiccups will fade quickly. This will not be an issue in the next year at all, CNBC said during a conference organized by the Institute of International Finance. I think great markets adjust to it like companies do.