[Economy] Supply Crunch Risks Extending Into 2022, Stoking Inflation

[Mr.Talha]

 

 

Supply constraints that have challenged businesses and caused shortages of everything from semiconductors to sweatpants are deepening, adding to pressure on inflation and testing the Federal Reserve’s resolve to keep juicing the economy.

Economists and business executives now say those supply-chain disruptions, key labor shortages and resurgent demand driven by multiple rounds of fiscal stimulus will persist through the end of the year, if not longer.

“It turns out it’s a heck of a lot easier to create demand than it is to—you know, to bring supply back up to snuff,” Fed Chairman Jerome Powell said Wednesday after the central bank’s most recent policy meeting.

The squeeze on U.S. businesses shows little sign of letting up, particularly in the manufacturing sector.

The pace of manufacturing production and hiring slowed in May from the prior month even though new orders and order backlogs accelerated, according to the May Purchasing Managers Index published by the Institute for Supply Management.