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Inventory Shortages: A Growing Concern

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Inventory Shortages: A Growing Concern

May 17, 2022

During the pandemic many companies burned through their inventories. Now years later between shortages and high demand, means they still have not recovered. Industrial production may be up, but inventories still have a long way to go before they reach pre-pandemic levels. This suggests the US economy is still prone to shortages if anything goes wrong, as we are seeing with baby formula. More shortages may be coming if there are further problems with the global supply chain. But on a happier note, if there is a recession, it may not be so severe because firms will not be able to cut back on production (and workers) and run down their inventories.  

Source: FRED

Allison Schrager is a senior fellow at the Manhattan Institute. Follow her on Twitter here.

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