Round Rock Edition | December 2021

worse?

Current 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 the state of Texas, which measure the average change over time of prices of consumer goods and services since the early 1980s, when the CPI was set at 100. start? WHERE DID THE PROBLEM

WHAT MAKES THE PROBLEM

2019

Some issues are further contributing to supply chain disruptions felt by local businesses.

January 2019 CPI: 230.5 Construction

costs begin increasing more frequently than in years past.

Increases in construction costs for the past two years

“Supply chain disruptions cause unevenness of demand and inventory. Aswe go into a seasonwhere our own cinnamon honey ismore popular, or there’smore demand for it thannormal because of Thanksgiving

July 2019 CPI: 234.3 Robust pre- COVID-19 demand for goods from overseas reduces demand for locally produced goods.

COVID-19 shutdowns

Increased demand for locally produced and manufactured goods

March 2020 CPI: 234.3 Onset of COVID-19 temporarily halts overseas travel and

2020

April 2020 CPI: 231.8

and the holidays.” - Konrad Bouard, owner, Round Rock Honey

Robust demand for goods from overseas

December 2020 CPI: 235.1 A second round of stimulus goes out as part of the Coronavirus Response and Consolidated Appropriations Act. After people were panic buying toilet paper, the rst sign of supply chain issues emerged. Goods that are able to be stocked on shelves does not meet the 40% increase in demand for the product.

trade. Return to production of goods is not universal, and many borders remain closed to exterior travel and trade.

Shipping container shortages in the U.S. reduce international trade

April 2020 CPI: 231.8

SOURCES: ECONOMIST SAM TENENBAUM, WHITEHOUSE.GOVCOMMUNITY IMPACT NEWSPAPER

The rst round of federal stimulus checks is distributed

of COVID-19 and] consumer spending to go down … but that didn’t really happen,” Tenenbaum said. “A lot of the big factory operations can’t stop on a dime and then turn around and restart operations at full capacity in a few weeks. That’s not really how everything works.” Dealingwith ination Another local business aected by supply chain disruptions is Starmark, a pet training center in Hutto that also manufactures pet products soldacross the country and internationally. Starmark President Keith Benson said supply chain disruptions have created challenges for the company primarily in the form of material shortages. Paired with those shortages are spikes in material costs, he said. Data from the U.S. Bureau of Labor Statistics show from April 2020 to September 2021, the consumer price index, which measures the price of consumer goods, increased in Texas from 231.8 to 248, or about 6.99%. The increase is more than double the state’s average year over year jump in the ve years prior. Put into a real world circumstance, archives from the U.S. Department of Agriculture show the average retail price for a gallon of conventional

whole milk in Dallas in April 2020 was $2.79. By October 2021, the average price was $3.29. Prior to the pandemic, from April 2018 to October 2019, the average price of milk dropped from $2.79 to $2.32. For Snow, that increasing cost of goods brought uncertainty to how he priced Thanksgiving catering, a ser- vice he oers each year. This year, he oered meals for $18 per person, and he said he was con- cerned about the cost of producing that meal exceeding $18 by Thanks- giving, as ination “eats up the mar- gins,” while he eats up the cost. “When I ordermy turkey next week, is it going to be twice as much as it was when I wrote the menu and prices?” Snow said prior to Thanksgiving. “Am I going to even be able to get it on the day that I want it?” Tenenbaum said COVID-19 also changed the way consumers spend their money. Prior to the pandemic, services, not goods, accounted for the majority of consumer spending, but the pandemic changed that, he said. “COVID[-19] sort of made those closer personal interactions that are much more service-oriented certainly more dangerous,” Tenenbaum said. He said that shift led to consumers spendingmore on goods than services

via the Coronavirus Aid, Relief, and Economic Security Act. Many consumers use the money to buy goods they otherwise would not have, creating an unexpected spike in demand. March 2021 CPI: 240.5 The American Rescue Plan Act provides another round of federal stimulus funding, continuing to create additional demand for goods.

2021

May 2021 CPI: 244.9

The consumer price index shows that the cost of lumber is three times what it was just one year ago, delaying construction timelines or forcing builders to scale down projects.

October 2021 CPI: N/A Surges in e-commerce and logistics disruptions

July 2021 CPI: 246.9, September 2021 CPI: 248 A shortage of semiconductors in the

lead to supply chain issues aecting businesses and consumers. Shipping delays caused by container shortages

U.S. causes a price hike in new and used vehicles, resulting in limited stock for sale. SOURCES: SAM TENENBAUM, WHITEHOUSE. GOVCOMMUNITY IMPACT NEWSPAPER

2022

at international ports compound the issue.

demand for and the supply of most goods decreased dramatically. However, as restrictions continue to lift and federal stimulus measures amplify demand for goods faster than expected, suppliers are having trouble keeping up, according to Tenenbaum. “We all kind of expected the econ- omy to weaken considerably [because

CONTINUED FROM 1

exacerbated

by

the

COVID-19

pandemic. Sam Tenenbaum, director of ana- lytics and Central Texas economist for commercial real estate informa- tion company CoStar Group, said when pandemic restrictions were rst put in place last year, both the

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