Economists believe that if these shortages trickle into the next year, it could further increase the prices of commodities. As central banks across the world dispute over inflation, they must also consider whether these pandemic shortages and delays are temporary or will spill into the next year.

Lawrence Lepard

Lawrence Lepard, economist and managing partner at Equity Management Associates, retweeted an article shared by macro analyst Luke Gromen on how the world is adapting to problems related to pandemic shortages, ranging from construction materials to computer chips that experts opine should have been resolved by now.

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As businesses struggle to meet the sudden growth in demand, they state that nothing has returned to normal. Accounts of people running short of products at supply stores reveal that businesses are not only getting used to paying soaring shipping costs for the goods being purchased but is also indicative of how the manufacturing and shipping industries are competing with the disruption caused by the Covid-19 pandemic.

Shortages, delays in delivery, and rising costs continue to impact small and large businesses globally, while consumers are confronted with a new problem of stock availability. Automotive manufacturer Toyota recently announced that the company is reducing its global production of cars by 40% due to a shortage for computer chips.

Factories are also reducing their operations despite growing demand for wares due to the inability to purchase raw materials, plastics, and metal parts. Construction companies, meanwhile, are paying high costs for hardware, paint, and lumber and hardware, while waiting weeks and months for what they need.

David Wessel

David Wessel, a journalist and director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, shared an article on Fed Chair Jerome Powell having dealt well with not just recessions but also full employment after taking the jobless rate down to 3.5% in the US. This is expected to be the lowest in 50 years since the Covid-19 struck, and therefore, Powell deserves a reappointment rather than the arguments advocating his removal.

The US Fed is facing growing criticism amid an unrelenting pandemic, right from tackling inflation which has peaked to its highest level in 30 years, to prompting income inequality and being weak on climate change agendas. President Biden is also being urged by many senators to remove Powell as Fed Chair on the grounds of his stand to loosen various bank-safety regulations that were implemented after the 2008 financial collapse.

Others believe that the criticism of Powell is rooted in his independence, which is being looked on as a threat to more aggressive approaches. The chairman is a realist and is focusing on price stability and full employment as the foundation of the central banker’s role amid the raging pandemic.

Daniela Gabor

Daniela Gabor, associate professor in economics at the University of the West of England, Bristol, shared a letter on the Covid-19 pandemic being a massive threat for emerging and developing countries (DECs). The letter signed by various economists such as Nelson Barbosa suggested that instant capital controls, coordinated by the International Monetary Fund (IMF), are needed to prevent a financial disaster.

In global financial crises, liquid assets are held in safe currencies like the US dollar to enable rich countries to respond with necessary fiscal and monetary tools. However, economists emphasise that ever since the pandemic struck in March 2020, international investors have withdrawn large sums from DEC assets, contributing to a dramatic currency depreciation, especially for those subject to falling prices of commodities.

Economists urged governments to reduce the externally imposed restraints on DECs, as they struggled to fight the Covid-19 pandemic, economic recession, unemployment, and the financial crisis.