Supply reduction expected until 2022 or 2023

COCKEYSVILLE, Maryland – People used to go to Valley View Farms to buy five tomato plants and end up with $ 5,000 in patio furniture.

This year is different. After a record explosion in sales in March, the showroom floor is nearly empty of outdoor chairs, tables and chairs people can buy.

The suburban Baltimore garden supply store has been waiting six months for a shipping container from Vietnam filled with $ 100,000 of wicker and aluminum furniture. Half of the container has already been sold showing photographs to customers. The container should have arrived in February, but it reached US waters on June 3 and has just docked in Long Beach, California.

“Everyone is so far behind,” said John Hessler, 62, patio section manager. “I’ve never seen anything like it.”

President Joe Biden’s economy faces the unusual challenge of perhaps being too strong for its own good.

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There is the paradox of the fastest growing in generations at over 6% but also lingering delays for anyone trying to buy furniture, cars and a wide array of other goods. It is almost the opposite mirror of the recovery from the Great Recession of 2007-2009, which was marred by slow growth but also by the near instantaneous delivery of almost any product imaginable.

What matters in the end is that demand remains strong enough for companies to catch up and shorten long waits.

“It’s a very good problem for the economy,” said Gus Faucher, chief economist at PNC Financial Services. “It is better to have too much demand than not enough, because too little demand is the recipe for a prolonged recession.”

Republicans have presented shortages and price increases as a sign of economic weakness, while Biden can counter the fact that wages are rising at a rate that is helping the middle and working classes. But the real challenge goes far beyond the crass arguments of politicians for an economy ruled by a mixture of market forces, tensions with China, setbacks from natural disasters and the unique nature of restarting an economy after. a pandemic.

As America rolls out of the July 4th weekend into the height of summer, the outdoor furniture industry provides insight into the dilemmas facing the economy. A series of shortages have depleted warehouses and prices have risen more than 11% a year as Americans resume barbecues and parties after more than a year of isolation. Industry cannot find workers, truckers and raw materials – a consequence of not only government spending, but also overcrowded ports, an explosion at an Ohio chemical plant and the devastating snowstorm that hit Texas in February.

Patio furniture makers interviewed by The Associated Press say they expect the supply squeeze to end in 2022 or 2023 – meaning it could remain a political flashpoint even if the broader inflation risk wears off as expected by many Federal Reserve officials and Wall Street analysts. The shortages reflect both stranded shipping containers, a shortage of truckers and the aggravated effect of a deadly explosion in April at the Yenkin-Majestic Paints and OPC Polymer Plant in Columbus, Ohio, which depleted l national furniture supply.

The Biden administration, well aware of the challenge, has made repairing supply chains a priority. He’s also trying to spend more money on making the U.S. electricity grid and other infrastructure more resilient to extreme weather events as part of a bipartisan deal with Senate Republicans.

“You saw what happened in Texas this winter: the whole state system fell apart,” Biden said in a recent speech from Wisconsin. “This is why we must act.

Administration officials expect supply chain problems to correct themselves, although they are cautious about asserting a specific time frame due to the lack of nature. precedent for recovery from the pandemic.

They noted that a toilet paper shortage at the start of the pandemic was corrected within weeks as factories were able to increase production. But in this case, Biden’s White House views the problem in global terms, with many challenges in Asian ports, rather than a purely national one.

Republican lawmakers have exclusively blamed Biden’s $ 1.9 trillion coronavirus rescue package, saying the shortages cause inflation that behaves like a tax by eating away at workers’ wages and savings. Outdoor furniture companies say finding workers has become more difficult in part because of higher unemployment benefits, but they are not fully embracing the Republican line that government dollars have caused prices to rise. sustainable.

“Biden’s inflation agenda of spending too much money chasing too little property is doing major harm to hard-working families,” House Republican Whip Steve Scalise of Louisiana told a hearing in June.

Reality isn’t that simple for William Bew White III, who founded Summer Classics, an Alabama-based piece of furniture whose exterior products appear to belong to a Golden Age mansion or a terrace hotel on the along the Italian Riviera. He sums up his problems with the three F’s: foam, fabric and freight.

“Frost in Texas has shut down two of the factories that make the chemicals that make the foam,” he said. “These factories were only able to reopen between mid-March and the end of March. And the offer has dried up. I don’t know how someone who works in the upholstery business gets 40-60% of the products needed.

His company can produce up to 3,500 outdoor cushions a day, but for most of the year he did not receive the supplies he needed in large part because of the snow that cut the power grid. from Texas. It has revenue growth of between 40% and 60% on an annual basis and it is difficult to judge by how much to increase production to meet this demand and if this demand can last.

He’s more concerned with what his Chinese furniture suppliers charge than the prices at home. Its prices in China have jumped as much as 26.5% since January, sometimes retroactively on orders that were already in sea containers.

“It’s not sustainable,” White said.

In many cases, companies are simply trying to absorb the higher costs. Erik Mueller, CEO of Watson’s, the Cincinnati-based outdoor and home entertainment chain, said he wanted to protect his store’s reputation as a valuable supplier. He doesn’t see the situation as parallel to the mix of stagnation and inflation of the 1970s that helped oust Jimmy Carter from the post-term presidency.

“It’s not the 70s,” he said. “We always have products at reasonable prices. “

While he believes generous unemployment benefits have delayed hiring because people can earn more by not working, Mueller also sees inflation as a ripple effect of the pandemic. Some people were unable to work because of illness or their shifts were cut. The rush to supply when economies reopened happened too quickly for factories and transportation companies that had yet to be able to revert to their previous capacity. It was all associated with a United States which, after a brutal year, simply welcomed the relief of lounging by the pool with friends.

The problem is one of market forces that override the authority of any individual, even that of the President of the United States.

“You just have this exorbitant amount of demand due to a unique situation that was beyond everyone’s control,” Mueller said.

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