Supply chain issues began nearly two years ago with the start of the COVID-19 pandemic. Included in this timeline are consumer price index gures for Texas, which measure the average change over time of prices of consumer goods and services since the early 1980s, when the CPI was 100. WHERE DID THE PROBLEM START? overseas travel and trade. The return to production of goods is not universal, and many borders remain closed. December 2020 CPI: 235.1 A second round of stimulus funds goes out as part of the Coronavirus Response and Consolidated Appropriations Act. March 2021 CPI: 240.5 The American Rescue Plan Act provides another round of federal stimulus funding, continuing to create additional demand for goods. March 2020 CPI: 234.3 The onset of COVID-19 halts
WHAT MAKES THE PROBLEM WORSE?
2019
A January survey of Texas business owners found 70% of businesses had been negatively aected by COVID-19 in the past month. Of those businesses negatively impacted, the following factors played a part.
January 2019 CPI: 230.5 Construction costs begin increasing more frequently than in years past.
Increased employee absenteeism
Lower demand
83.3%
25.3%
July 2019 CPI: 234.3 Robust pre-COVID-19 demand for goods from overseas reduces demand for locally produced goods.
Reduced productivity due to alternative work arrangements
Partially shut down business operations temporarily
46.7%
13.6%
New or worsened hiring diculty
Fully shut down business operations temporarily
43.6%
1.6%
2020
April 2020 CPI: 231.8
New or worsened supply chain disruptions
SOURCE: FEDERAL RESERVE BANK OF DALLAS COMMUNITY IMPACT NEWSPAPER
43.6%
As people are panic- buying toilet paper,
the rst sign of supply chain issues emerge. Goods that are able to be stocked on shelves do not meet the 40% increase in demand for the product.
year. According to Lance LaCour, pres- ident and CEO of Partnership Lake Houston, the number of businesses in the area increased from 8,144 in 2020 to 8,310 in 2021. “We have seen a growth of [166] new businesses from 2020 to 2021,” LaCour said. “We’ve seen an annual growth rate of 1.97%, and consumer spending was $5.7 billion in 2021.” Pandemic hardships State-mandated shutdowns for nonessential businesses as well as mask requirementswere staples of the early pandemic. In March 2021, how- ever, Texas Gov. Greg Abbott lifted the mask mandate and allowed busi- nesses to operate at 100% capacity. Enduring the shutdown was dicult, said Steve Bixby, who owns the Bixby Properties and Green Oaks Tavern—a live music venue in Humble—with his wife, Debbie. “We suered badly,” Bixby said. “Many across the state in our situa- tion were forced to close. [The state government] then oered the oppor- tunity for bars to become restaurants. … [So] we bought a hot dog roller.” In 2022, businesses are still expe- riencing “aftershocks” of the pan- demic, said Joe Breda, who owns Old Humble Distilling Co. in Atascocita. “We’re behind by 12 months or more,” Breda said. “Because now you’ve got to catch up to where you were [before the pandemic] and then try to get to where you should be.” Although Texas businesses have been operating at 100% capacity for about a year, owners are facing other pandemic-induced challenges.
Price increases have been rampant for certain items, according to the Bureau of Labor Statistics. The cost of meat, poultry, £sh and eggs increased by 13% from February 2021 to Febru- ary 2022, while the cost of motor fuel increased by 38.1%. The price increases on food items have been the most challenging factor for Michael Swift, owner of J. Christo- pher’s Pizza-Pasta in Kingwood. “We have seen prices skyrocket on certain items. A case of chicken used to cost $58; now it is $120,” Swift said. “We did a price increase of 8% over the last year, and we have had some pushback even though our price increase is not sucient to cover our increased costs.” Many of the issues businesses are facing are related to the supply chain— the ow of goods from the producer to the customer—which was essentially halted as nations ceased trading and shipping early on in the pandemic, according to Patrick Jankowski, senior vice president of research for the GHP. Although many ports have opened back up, variant outbreaks still pose a threat to this system. Breda, who moved his whiskey distillery to Atascocita in 2020, said items experiencing the most short- ages in his industry have been glass bottles and packaging materials. Bixby, who serves a variety of bev- erages at his establishment, said he has seen prices jump in small spikes over time, especially for beer. Items that have been dicult for him to obtain include alcohol and straws. “We went through about a two- month period where you couldn’t get
May 2021 CPI: 244.9
The CPI shows the cost of lumber is three times what it
was a year ago, delaying construction timelines or forcing builders to scale down projects.
2021
July 2021 CPI: 246.9 A shortage of semiconductors in the U.S. causes a
price hike in new and used vehicles, resulting in limited stock for sale.
October 2021 CPI: 250.4 Surges in e-commerce and logistics disruptions
January 2022 CPI: 254.5 COVID-19 cases are declining after months of increased cases caused by the omicron variant. Supply shortages and ination continue in Texas, posing challenges for consumers and small businesses.
lead to supply chain issues aecting businesses and consumers. Shipping delays caused by container shortages
2022
at international ports compound the issue.
SOURCES: SAM TENENBAUM, WWW.WHITEHOUSE.GOV, U.S. BUREAU OF LABOR STATISTICS, TEXAS COMPTROLLERCOMMUNITY IMPACT NEWSPAPER
operating costs and are starting to have to divert some of that burden onto customers, experts said. An ination update from the Greater Houston Partnership reported a 7.9% rise in consumer prices nationwide as of February 2022 since the start of 2021. Even so, there has been growth for the Lake Houston economy in the last
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president and CEO of the Greater East Montgomery County Chamber of Commerce. “Supply chain shortages are a real issue. I know of one [cham- ber] member that is ordering inven- tory years in advance, just in case.” Businesses are facing higher
22
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