Will Coronavirus Lead to Inflation (that the Government Actually Reports)?

For a long time, I have questioned how our government reports inflation.  For example, according to their metrics, a car is “cheaper” today than it was twenty five years ago because of added features that government economists place some magical value on.  But in terms of affordability (as a percentage of income), a car is much more expensive today than it was twenty five years ago. 

Anyway, back to my point.  I have three anecdotal stories to share regarding coronavirus and its impact on product availability and prices.

  1. This is from a business leader in the shrink sleeve industry:  “We had an interesting week with three “old” customers returning and several new companies requesting quotes.  Looks like the issues in China are getting people scared and they are looking for USA sources.”
  2. My brother and sister in law are building a house.  They ordered a custom shower insert.  It was supposed to ship from China last week.  That didn’t happen.  They have no idea when it will ship. They are now scrambling to find a different source.  It’s going to cost more.
  3. I was recently on a plane with a man in the clothing industry.  Supply is good now but his company is getting concerned about supply in the fall and winter, as the major factories they use are closed right now. 

Even if coronavirus does not get worse, it will have a lasting impact on global supply chains.  Companies are going to realize that you don’t have a business if you can’t get a product.  Maybe the long sought after inflation our Federal Reserve has desired is finally coming.  

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