Thread by @WhiteHouseCEA

The disruptions in U.S. supply chains are serious and widespread—but are likely to be transitory. They reflect an economy that is pivoting from recession to growth faster than many businesses expected. New CEA blog post here: whitehouse.gov/cea/blog/2021/… 1/

A telltale sign of shortages & supply-chain issues: Inventory-to-sales ratios are at record lows across the economy. These ratios measure how many days of current sales that businesses and retailers could support out of existing inventories. 2/

Low inventories have caused cascading issues in industrial supply chains. In the latest Census Small Business Pulse survey (May 31-June 6), 36% of small businesses reported delays with domestic suppliers, concentrated in manufacturing, construction, and trade. 3/

These supply-chain problems have held back economic activity and pushed up prices, especially in sectors like homebuilding and auto manufacturing. Autos, in particular, explain about half of the May increase in core CPI inflation. 4/

https://twitter.com/WhiteHouseCEA/status/1403003804266627076

The history of shortages and supply-chain disruptions, from failed coffee harvests to the 2011 Japanese earthquake to the Great Toilet Paper Shortage of 2020, have a lot to teach us about the present moment—and how businesses can (and can’t) respond to it. 5/

Federal Reserve Bank surveys of manufacturers suggest that supply-chain issues will abate over the next six months or so. In these surveys, a record share of manufacturers reports longer-than-usual current delivery times. But they do not expect delays in the near future. 6/

Markets will eventually adjust to these shocks, but the public sector can play a valuable role in reducing the costs associated with such adjustments—in the short term, by coordinating industrywide responses to bottlenecks, and in the long term, by reducing vulnerabilities. /end

Full blogpost here: whitehouse.gov/cea/blog/2021/…