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Consumers increased their spending on durable goods (which last more than three years) by 40% between March 2020 and March 2021, as much as over the previous four years. Producers and suppliers were understandably unprepared, which led to shortages, backlogs, and price spikes for many goods.  In the last few months, however, as orders have been filling and emergency income benefits come to an end, surveyed intentions to buy more consumer goods fell to 40-year lows.

Meanwhile, the supply chain is still ramping up.  The west coast ports of Los Angeles and Long Beach, California, account for 40% of all shipping containers entering the United States.  As of Monday, there were 62 ships berthed at the two ports and 81 waiting to dock and unload, according to the Marine Exchange of Southern California.

To unload goods faster, yesterday, port operators, dockers, and the largest shipping companies agreed to work non-stop around the clock, and this will help fill orders and rebuild inventories.  See Aim to Ease Supply Chain Bottlenecks with LA Port going 24/7.

Contrary to the consensus hysteria about insatiable demand and runaway prices, the pandemic-ignited consumption bulge is ending just as supply is rebuilding.  Since May, the downturn in key commodity prices like lumber, copper, and iron ore support other evidence that this global manufacturing cycle peaked last spring.

Although stockpiling and financial speculation can create price pressure for longer, the gravity of receding demand should continue to weigh on the price of most commodities and goods in the coming months; this won’t be inflationary.