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Editorial: Hard financial storm appears headed our way
Port of Savannah
Cargo is loaded and unloaded at container berth nine at the Port of Savannah Garden City Terminal. (Photo courtesy Georgia Ports Authority.)

There is a perfect storm of foul economic weather brewing across the nation, and the forecast isn’t good for consumers or for businesses, especially the small local businesses that are the foundation of the national economy.

Potentially catastrophic financial winds are converging from three directions and threaten to form an intertwined tornado of fiscal damage. Supply chain dynamics, labor force issues and rising rates of inflation are combining to batter a national economy still trying to recover from nearly two years of pandemic uncertainties.

All is not doom and gloom and there are a few slivers of sunshine through the cloudy skies. The stock market seems to be rebounding after a weak third quarter. Consumer retail spending rose in September when many expected it to drop. Wages for employees are rising, hopefully enough to offset any inflationary price increases. More companies are conducting business as usual thanks to the COVID vaccine.

The nation’s largest ports, though, have container ships sitting for days and weeks because the goods they carry cannot be unloaded and trucked to businesses across the country. There aren’t enough truck drivers, not enough dock workers.

The problem is so severe off the coast of California that a congresswoman from there has proposed legislation to temporarily stop ships from anchoring off the coast. This comes after damage from anchors was cited as the likely case of a ruptured pipeline and massive oil spill.

It’s unclear what U.S. Rep. Michelle Steel expects those ships to do if they cannot wait in line to be unloaded. The ports at Los Angeles and Long Beach handle roughly 40% of all the containerized cargo coming into the country each year.

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The White House addressed the issue this week with an agreement that the port of Los Angeles would remain open 24/7 for the immediate future. Some of the nation’s largest importers, companies like Walmart, FedEx and UPS, have committed to unloading ships during off-hours to help relieve the port congestion.

The port in Savannah, one of the critical pieces of the state’s economic foundation, faces the same problem.

Extended hours may help, but they aren’t going to solve the manpower issues that have created a kink in the supply chain for months, one that keeps getting bigger.

And it’s not just truck drivers that are in short supply.

All across the country, businesses are scrambling for help, even as a government report from Tuesday shows more people are quitting their jobs. The Labor Department reported that in August alone, roughly 3% of the nation’s entire workforce vacated their employment positions, a record number. Some 4.3 million people quit jobs in August, after 4 million did so in July.

Most of those tendering resignations were in positions that require working directly with the public – restaurants, retail, education, government service – which makes you wonder if fatigue and burnout from issues related to the pandemic may be a factor in such mass defections. The assumption is that some of those moved to other jobs, but even if that’s the case the result will be no net gain in total employment.

Much has been made of the effect of COVID-19 on the workplace, with indications that some people have used the interruption of normal work routines as an opportunity to re-evaluate their career choices and look for new opportunities to pursue. Others may have found themselves jobless after a business closed and have yet to rejoin the ranks of the employed. Some may still fear the hazards of potential exposure and prefer not to work with the public or in close proximity to co-workers. And others still may be tired of dealing with an increasingly uncivil consumer market.

Whatever the cause, companies across the nation are desperate to hire people, and fewer people are desperate to be hired.

Which results in companies paying more for the jobs they have, sometimes substantially more, which is a great thing if you are in the job market, but maybe not so great in relation to the rumbling storm of inflation that continues to build.

The Labor Department reported Thursday that wholesale inflation rose 8.6% in September compared to a year ago, the largest increase since the 12-month comparison was begun in 2010. At the retail level, September inflation was 0.4% with the consumer price index up 5.4% in the span of a year, the largest increase since 2008.

With wholesale inflation rising rapidly, you can be sure retail inflation is going to follow suit in the months to come as we head into the traditionally most active consumer season of the year.

When companies pay more for labor, they charge more for products. When companies can’t get inventory because of supply chain issues, they charge more for the inventory they do have. When inventory becomes scarce, that which is available becomes more expensive.

While it remains to be seen whether efforts from Washington to improve the supply chain and to lower inflation will prove successful, we can’t help but remember these are the same folks who can’t balance the federal checkbook and think the answer to spending more than they take in is to increase the amount of money they are spending.

Ill economic winds are gaining steam, and a hard financial storm appears headed our way.

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