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the outbreak. The economy increased at the slowest pace in the third quarter, at only 2%. The pandemic shutdown’s unusual nature has resulted in a slower and now shallower recovery than expected, as the economy battles to overcome supply chain disruptions, labor shortages, and price inflation. Consumer expenditure, which accounts for almost twothirds of the US economy, increased by 1.6 percent in the third quarter.
Labour Shortage, Supply Constraints, and Inflation Hold Back the Economy
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hey are the primary engines that propel most countries’ economies. The value of the economy is directly affected by labor availability, inflation, and supply restrictions. Furthermore, they are linked since labor shortages result in orders being delayed or canceled. As a result, prices for accessible items rise, and inflation is hotter and more persistent than projected due to rising commodity costs. It is where the US economy stands, just like most other countries’ economies boosted by 16 l
LABOUR SHORTAGE Economists believe shifting demographics, such as the aging and retirement of workers, border controls and immigration quotas, and demands for better compensation and flexible working conditions, are all contributing to the shortages. The pandemic lockdown has forced most employers to send most of their employees home to keep up with the WHO guidelines and rules. It has affected workforce efficiency in most organizations leading to unreliable sources of supply to the consumers. As per Chief economist Diane Swonk, “Hiring should improve now since there are more vaccines and immunity also.” However, despite companies bringing back the personnel less, demand is still surpassing supply. The longer these pandemic-related distortions and the pandemic endure, the more workers will be permanently displaced. SUPPLY CONSTRAINTS They are limitations on a market’s ability to offer goods and services stock. COVID-19 problems, combined with a surge in demand, have resulted in a supply-chain catastrophe. Worker, equipment, and space shortages have only exacerbated the problem. The rate of supply is still low compared to the demands in the market. With the workforce shortage, there is a low supply of output available for users. INFLATION In an economy where prices rise due to high production costs and, consumers have high purchasing power, inflation is always the THE POWER IS NOW MAGAZINE | DECEMBER 2021
