Time alone will not solve the global Great Supply Chain Disruption, as The New York Times reported. “It’s unlikely to happen in 2022,” said Phil Levy, chief economist at Flexport, a freight forwarding company in San Francisco. “My crystal ball gets murky further out.”
- What is required are investments, technology and a refashioning of the incentives at play across global business. It will take more ships, additional warehouses and an influx of truck drivers, none of which can be conjured quickly or cheaply.
- Mayhem at factories, ports and shipping yards, combined with the market dominance of major companies, is a key driver for rising prices.
- Cheap and reliable shipping may no longer be taken as a given, forcing manufacturers to move production closer to customers. The crunch has companies across various industries warning of delays or effects to profits.
- For the global supply chain, the very concept of a return to normalcy has given way to a begrudging acceptance that a new normal may be unfolding.
Situation in the US
It was therefore about time that the US Congress passed the Infrastructure Investment and Jobs Act (IIJA) back in November 2021, as reported in ISGAM’s last Manager’s Report. Plans include significant funding for ground transportation, that would help improve economic productivity, as well as modernizing the power grid and making it more resilient and sustainable, including clean energy sources. The bi-partisan USD 1.2 trillion plan splits USD 650 bn in re-authorized spending and USD 550 bn in new expenditures.
Meanwhile it is looks increasingly unlikely that President Biden’s broader economic agenda will garner enough votes to pass before the midterm elections. So further fiscal stimulus is unlikely to be forthcoming in the US. Having said that, consumers and businesses remain in decent shape, with a strong jobs market, high cash balances and low debt compared to before the pandemic, so we expect the US economy to retain positive momentum once the Omicron wave of infections passes.
To read the complete Manager’s Report, please visit our client login area or contact us.
Date: 3 February 2022
By Marianne Rameau, ASIP, Portfolio Management Team, ISGAM AG
Manager’s Report published on 31 December 2021
The New York Times article published 1 February 2022 by Peter S. Goodman
Contact: enquiry@isgam.ch
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