People used to visit Valley View Farms to purchase five tomato plants, and then end up with $5,000 worth of patio furniture.
This year is different. The showroom floor is nearly empty of outdoor chaises, tables, and chairs after a record-breaking March sales month.
A shipping container from Vietnam containing $100,000 worth of wicker furniture and aluminum furniture has been waiting six long months for the suburban Baltimore garden supply store. Customers have already sold half of the container by simply showing them photos. Although the container should have arrived in February it was shipped to the United States on June 3, and is now docked at Long Beach, California.
John Hessler (62), patio manager, stated, “Everyone’s just so far behind.” “I have never seen anything similar.”
Biden’s economy is facing the unique challenge of being too strong for its good.
The paradox is that the fastest growth rate in generations is more than 6%, but there are still delays for those trying to purchase furniture, autos or a variety of other goods. This is almost the opposite of the recovery after the Great Recession in 2007-2009. It was marked by slow growth, but also near-instant delivery for almost every product.
It is important that companies are able to keep up with demand and reduce long wait times.
Gus Faucher (chief economist at PNC Financial Services) stated that “this is a very good problem to have for the economy.” It’s better to have too much demand than too few, as too little can lead to a prolonged recession.
Republicans have cited price rises and shortages as evidence of economic weakness . Biden, however, can argue that wages are rising at a pace that benefits the working and middle classes. The real challenge lies beyond politicians’ blunt talk. It is a combination of market forces and tensions with China. Setbacks from natural catastrophes, as well as the unique nature of restarting an economic economy after a pandemic.
The outdoor furniture industry is a glimpse of the problems facing the American economy as it moves from the July Fourth weekend to the middle of summer. After more than a year in isolation, Americans are returning to their backyard parties and barbecues due to a series of shortages that has seen warehouses empty and prices rise at over 11% per annum. The lack of workers, truckers, and raw materials in the industry is a result not only government spending, but also crowded ports, an explosion at an Ohio chemical factory, and the devastating snowstorm in Texas.
The Associated Press interviewed patio furniture manufacturers and said they expected the supply shortage to end in 2022/23. This could make it a political flashpoint, even if inflation risks diminish as Wall Street analysts and Federal Reserve officials expect. The shortages are due to stranded shipping containers and a lack of truckers. They also reflect the combined effect of a fatal explosion at the Yenkin Majestic Paints and OPC Polymer Plant in Columbus in April that depleted the domestic furniture supply.
It is well-aware of this challenge and has made fixing supply chain problems a priority for the Biden administration. The Biden administration is also trying to redirect more money to make the U.S. grid and other infrastructure more resilient to extreme weather events, as part of , a bipartisan agreement reached with Senate Republicans.
Biden stated in a Wisconsin speech that “You saw what happened this winter in Texas: The whole system in the state collapsed.” “That’s why it is imperative that we act.”
Officials from the Administration expect supply chain problems to resolve themselves, but they are cautious about stating a timeframe due to the unique nature of the recovery after the pandemic.
They also noted that the shortage in toilet paper at the outbreak was remediated within weeks by factories that could increase production. Biden’s White House sees the problem as a global problem, with many of its challenges occurring in Asian ports. This is in contrast to a domestic problem.
Republican lawmakers blame Biden’s $1.9 billion coronavirus rescue program for inflation. They claim that the shortages have caused an inflationary effect by eating into the savings and salaries of workers. Although outdoor furniture companies acknowledge that it is more difficult to find workers due to the higher unemployment benefits they do not agree with the Republican claim that government dollars have caused an inexorable price rise.
“The Biden inflation agenda, too much money chasing down too few goods, is causing major damage to hard-working families,” House Republican whip Steve Scalise of Louisiana stated at a June hearing.
William Bew White III, a Alabama-based furnisher, found that the reality is more complicated than he imagined. Summer Classics’ outdoor products seem to belong next to a Gilded Age mansion, or a terraced hotel on the Italian Riviera. His problems can be summarized as three F’s by White III: foam, fabric, and freight.
He said that two Texas plants that produce foam chemicals were shut down by the Texas freeze. These plants could not reopen until mid- to late March. The supply was also reduced. It’s hard to imagine how someone who’s in the upholstery industry can manage to make it on 40-60% of the products they need.
His company can make up to 3,500 outdoor cushions per day. However, he wasn’t getting the supplies he required for the majority of the year due to the Texas power grid being shut down by snow. His revenue is growing between 40% and 60% annually. It’s difficult to know how much production can be increased to meet the demand.
He cares more about the prices his Chinese furniture suppliers charge than the price of his home. His China prices have increased by as much as 26.5% in the past year, sometimes retroactively for orders already in shipping containers.
White stated, “This is not sustainable.”
Many companies simply want to absorb higher costs. Erik Mueller, the CEO of Watson’s outdoor furniture and home recreation chain in Cincinnati, stated that he wants his store’s reputation for providing value. He doesn’t think the current situation is similar to the 1970s combination of inflation and stagnation that drove Jimmy Carter from office after one term.
He said, “This isn’t the 70s.” “We still have reasonably priced goods.”
Mueller believes that the generous unemployment benefits have slowed hiring, as people can make more by not working. However, he also views inflation as a result of the pandemic. Many people were unable to work due to the pandemic or because their shifts were reduced. For shipping companies and factories that were not yet capable of returning to their former capacities, the rush to get supplies occurred too quickly as economies reopened. All of this was accompanied by a United States that, after a hard year, simply enjoyed the freedom of relaxing at the pool with its friends.
The problem is caused by market forces that are outside of anyone’s control, not even the U.S. president.
Mueller stated, “You have just such an exorbitant quantity of demand because of a unique circumstance that was beyond everyone’s control.”