September 17, 2021

The World Live Breaking News Coverage & Updates IN ENGLISH

The World Live Breaking News Coverage & Updates IN ENGLISH

Covid waves will hit the global supply chain for two years, Reagan economist warns

2 min read
Covid waves will hit the global supply chain for two years, Reagan economist warns
Share This :
Covid waves will hit the global supply chain for two years, Reagan economist warns
Covid waves will hit the global supply chain for two years, Reagan economist warns

The semiconductor shortage is affecting consumers’ ability to buy cars, smartphones and virtually all electronics — and there may be little relief in sight.

According to economist John Rutledge, the Covid-19 pandemic will continue to inflict pain on the global supply chain and contribute to the semi logjam into 2023.

“The nature of epidemics is that they don’t just have a one-and-done wave of infections. They have many waves of infections,” Safanad’s chief investment strategist told CNBC’s “Trading Nation” on Thursday.

Rutledge, who played a major role in President Ronald Reagan’s economic plan, warns that Covid variants will continue to close ports. It’s something that happened last month at China’s Ningbo-Zhoushan port, which is the third busiest in the world.

“That’s because of a small number of infections that developed there,” Rutledge said. “Seamen have not been inoculated around the world. So, some port, somewhere, is going to close again, and it’ll hit semis, but other things as well.”

He notes the closures, along with a lack of supplies and materials, are having widespread global impact.

“Mostly, you produce more slowly, and that’s what hits GDP,” said Rutledge, a CNBC contributor. “If you can’t get the materials you need, you have to slow down production.”

Rutledge also lists worker shortages as a major reason why supply chain troubles will linger.

“It’s not clear how many of those workers are afraid to go to work, don’t want to go to work or still have plenty of cash,” he said. “But it’s pretty clear to me that this worker shortage is not going to go away in three months or six months or 12 months.”

Rutledge attributes half of inflation to supply chain troubles. But what’s hurting production may be bullish for the market and the medium- to longer-term prognosis for the economic recovery.

“Growth is going to be a net positive, like the initial claims number we saw,” Rutledge said. “The global recovery is proceeding. It’s proceeding in waves.”

Disclosure: John Rutledge owns shares of Applied Materials, Taiwan Semiconductor, Nvidia and the iShares Semiconductor ETF.

Disclaimer

Share This :
Copyright © All rights reserved. | Newsphere by AF themes.