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Stress in the supply chain shows no signs of recovery

2021-10-20T18:34:56.556Z

The stress on supply chains in the US is intensifying and could slow the country's economy in the coming months, warns Moody's Analytics.



Supply chain crisis could last until 2022 0:56

(CNN) -

From port congestion and price caps to widespread shortages, stress on US supply chains is intensifying and could slow the economy in the coming months, warns Moody's Analytics.

"Supply chain headaches show no signs of abating yet," Moody's economists led by Matt Colyar wrote in a report Tuesday.

About 200,000 shipping containers, containing everything from toys and sneakers to critical parts for factories, remain trapped in the ships floating off the coast of Los Angeles.

A record 100 cargo ships, from barges to container ships, are anchored outside the ports of Los Angeles and Long Beach.

Transportation Secretary Pete Buttigieg acknowledged Wednesday that despite the Biden administration's efforts to address bottlenecks, it will take time for supply chains to return to normal.

"There will be disruptions and shocks in the system as the pandemic continues," Buttigieg told CNN's Jim Sciutto.

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"There are no bright spots"

To measure logistics stresses affecting the economy, Moody's recently created a US Supply Chain Stress Index that is comprised of various production, inventory and transportation metrics.

That index rose to 135.9 in August, compared to pre-pandemic levels of around 100.

Moody's said early signs point to another rise in the supply chain stress index for September, driven by further price increases.

"The stress on US supply chains is not abating," wrote the Moody's economists.

In an interview, Colyar said that none of the underlying metrics show improvement at this time.

“Everything is moving in the wrong direction.

There are no bright spots, ”he said.

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Supply chain stress is slowing the economy

The logistics nightmare represents a real obstacle to the economic recovery from covid-19.

Damaged by a shortage of materials and workers, US industrial production unexpectedly fell in September, according to the Federal Reserve.

Industrial production measures everything from manufacturing and mining to electricity and gas utilities.

Moody's warned that the "sand in the cogs" of the global economy could cause the US economy to grow more slowly than previously forecast.

In fact, there is a risk that the US economy barely grew in the third quarter, which ended in September.

The Atlanta Federal Reserve's GDPNow model was downgraded Tuesday to project that GDP grew at an annualized rate of just 0.6% in the third quarter.

That's drastically below a call for 1.2% GDP growth as recently as last week and nearly 4% last month.

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Wall Street economists are much more optimistic, calling for GDP growth of almost 4%, although that is lower than forecasts for the summer.

At the same time, Moody's warned that supply chain stress threatens to keep inflation high.

Consumer prices rose 5.4% in September, tied for the fastest rise in 12 months since 2008. Price spikes are most severe on everything from used cars and bacon to children's sneakers.

Procter & Gamble, the nation's largest consumer goods maker, said Tuesday it will raise prices for grooming, beauty and oral care products.

According to a distributor to stores, P&G sent an email, obtained by CNN Business, stating that it would increase the prices of some Olay moisturizers by up to 20%, select Crest and Oral-B mouthwash by up to 32%, and battery toothbrushes by up to 20%.

as much as 20%.

CNN's Nathaniel Meyersohn contributed to this report.

supply chain

Source: cnnespanol

All news articles on 2021-10-20

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