Supply chain issues have been in the news for months. From rising prices to concerns about out-of-control inflation, disruptions in the supply chain have been cited as one of the main causes for those issues.
What Happened: JPMorgan Chase & Co (NYSE:JPM) recently produced a report confirming these arguments from other scholars, and calling for the move to improve global vaccinations in order to bring costs down.
“COVID has disrupted supply chains in two major ways: surging demand for imported consumer goods in the West due to pandemic work from home trends and other home improvement spending, and a decline in workers required to maintain and operate these supply chains,” wrote Michael Cembalest, chairman of market and investment strategy for J.P. Morgan Asset & Wealth Management.
The main problem is that there are not enough people working to smooth out labor issues. As The Atlantic’s Amanda Mull writes, a drop in labor participation adversely effects supply chains because those people are ensuring that products get from point A to point B.
“Both at home and abroad, labor is the ghost in the machine,” she stated. “The supply chain is really just people, running sewing machines or loading pallets or picking tomatoes or driving trucks. Sometimes, it’s people in the workforce bubbles of foreign factories, eating and sleeping where they work, so companies can keep manufacturing sneakers through a Delta outbreak.”
What Else: Semiconductors have been particularly critical in this story, as they are needed to make many products, including cars, computers, laptops and more. Demand for these products has caused their prices to increase.
The good news, according to the JPMorgan report, is that places where these things are produced, including Malaysia, are starting to see COVID-19 infection and death rates decline.
Photo: Christian Wiediger via Unsplash
