HN Explorer

Ask HN: What Is Happening, with Everything?

9 points by antiterra ↗ HN
Has anyone found a decent take on what's going on right now in regards to the insane levels of retail demand? I'm aware that there are chip shortages and shipping shortages, but is that all there is to it?

It seems like this demand should result in price inflation, but that most companies are holding their prices, which results in a cyclical escalation of demand via arbitrage/scalping.

It seems to be across all kinds of products except, perhaps, food: Pokemon cards, cars, tech gadgets, crypto and even real estate (though this results in overbidding as much as arbitrage seeking.)

Is there risk of serious financial damage if:

A. The scarcity continues, and prices eventually creep up to match demand ( I've seen a few things go up in price, e.g. a Breville Smart Oven Pizzaolo oven that was $800 last year is now $1000, but most stuff is staying where it was.)

B. Supply catches up with demand and prices drop while inventory skyrockets

4 comments

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AnimalMuppet
I am not an economist. But I think it's that people mis-estimated future demand months ago. (I've seen statements that this is the case with chips for automobiles.)

People thought that the economy would shut down for Covid. So they planned to produce less. They ordered less in the way of parts and supplies to produce finished goods.

Then demand didn't drop, and everybody got caught short.

Why is food different? Because nobody planned on a drop in demand for food. The economy may shut down, but people still eat.

sbierwagen
One guess I've heard, which I find aesthetically appealing but don't know if it's particularly true or not, is that there may be a number of circular dependencies in the global economy.

COVID hits, and everybody cuts orders by 75%, runs production stockpiles down to zero, and lay off staff. The economy comes back three months later, and everybody tries to return to normal flow.

But factory A depends on intermediates from factory B, which depends on feedstock from factory C, which needs a replacement machine from factory A... Meanwhile, the main customer for factory B won't actually be placing any new orders, because they pivoted entirely to making N95 masks. Now they have a warehouse full of product they can't sell, because the vaccines came along way ahead of schedule, and it's no longer the case that every person in the world needs to wear a respirator 8 hours a day. On top of this you can, if you're feeling malicious, sprinkle some critical parts sitting in containers in ships piled up at Long Beach, or in line behind Ever Given...

shoo
it'd be interesting to have data supporting or refuting this. sounds like a supply chain version of trying to restart a power grid after a complete black out of all generation
ApolloRising
Miners have bought up all the graphics cards to do crypto, shortage drove up price, scalpers keep the price up with bots buying everything.

US Govt over spent the insane amount of stimulus money in the wrong places instead of on the people themselves during a crisis. Inflation is going to happen and many middle class goods are going to increase in price as a result.

If we did not have a vaccine it would have been much worse...