[arthur5005]

What this doesn’t really address is the why?

Yeah there’s more money floating around, so perhaps more people want to spend it, but why? Most people aren’t getting materially more stuff or even need that much more stuff, consumption’s already god damn conspicuous.

Maybe everyone can afford a jet ski all of a sudden? No, the stims didn’t really do /that/ kind of wealth expansion.

To me, this still looks like the bullwhip effect, which is expected to have an outsized effect on demand over at least a year or two.

Buyers, who got used to “just in time” shipping, got spooked by shipping delays and shortages from their suppliers, because of supply demand imbalances during shutdowns, and as a response they all put in orders for 2 to 3 times the amount they usually buy from their suppliers with the intent of rebuilding domestic stock so they don’t miss out on sales.

All of a sudden, aggregate demand explodes.

Shocking.

[ajsnigrutin]

Covid lockdowns have a a lot to do with that too.

People used to spent their money in restaurants, bars, cinemas, theaters, parties, festivals, massages, hairdressers, and a bunch of other services. If you add lockdowns, many things happen:

* people have leftover money, that they instead spend on "things"... and since they're used to using less services, this is also true for some time after the lockdowns

* If you're stuck at home, you'll buy stuff that makes that nice... a better tv, a game console,...

* Some lockdown policies directly affect your 'need for stuff' - school from home? Kids need their own PCs, you need to buy a scanner and a printer for them,...

* People working from home also have more free time, and decide to do the long delayed house work and projects - so people buy more construction materials (also people want houses outside of cities, because it's nicer to be there during lockdowns), so prices of that go up too

* and last but not least, manufacturers fuck up their orders, don't have stock buffers, and fail horribly

[eddyg]

You can easily see the massive increase in savings in data from the Fed (for the U.S., at least):

https://fred.stlouisfed.org/graph/?g=ysLo

Typical growth in household checkable deposits/currency/savings deposits was around $500 billion/year during the mid-2010's. last year it was... $2.6 trillion

[bloopernova]

$2.6T... good lord. I wonder whether it will level off at $500B/y again?

[throaway46546]

>Some lockdown policies directly affect your 'need for stuff'

I think this was the root cause of the toilet paper shortage. People who normally spend a large portion of the day at the office were now spending that time at home. There was a popular viral video at the time of a man driving around on a forklift in a warehouse full of toilet paper laughing about the shortage, but it was all commercial toilet paper not what you would use at home. Anecdotally I noticed a correlation between the level of traffic on the freeway and the amount of toilet paper on store shelves. When the freeways were empty the shelves were bare and as traffic started picking back up the shelves started replenishing.

[consp]

After the panic buy I've never seen a toilet paper shortage anymore. I therefore doubt your theory of correlation. Maybe it was so in the us but it definitely does not correlate for everyone.

[throaway46546]

It took forever for it to get back to normal here. There was limited TP available after the initial panic, but it took months to get anything decent on the shelves. I was ordering it online for a while.

[dagw]

48-72 hours after the initial panic my local large food store had literally more toilet paper on the shelves than I have ever seen in there before. However it was all super low quality and from brands I've never seen before or since.

[volkl48]

It's the cheap stuff that you normally find in the bathroom at an average office building, fast food place, etc.

With the world shutting down the companies that supply those kinds of places had a warehouse full of inventory and most of their usual customers either were entirely shut or going through a lot less product.

I'll wager your grocery store called one of them up and got a few pallets to resell, creative move on their part.

[throaway46546]

John Wayne toilet paper... it’s rough, tough and doesn't take shit off anybody.

[multjoy]

The root cause is that toilet paper is bulky and the stores simply didn’t carry as much of it as (say) tinned goods.

It didn’t take a big demand increase to start seeing gaps in shelves, and once that happened a degree of panic took hold and even though there was plenty in stock in warehouses, it wasn’t able to be distributed fast enough.

The difficulty is that the big supermarkets have got their supply chain down to a fine art and it only takes a small fraction of people to start buying an extra here and an extra there for it to start having an impact and they then have to struggle to keep up.

[noneeeed]

People really underestimate how small the slack is/was in parts of the supply chain.

I remember a couple of years ago when we had a lot of snow (for England) and it kiboshed the supply of things like milk and bread for about a week, even once all the roads were clear.

You only need a chunk of people to buy a few more toilet rolls than they usually would "just in case" and suddenly the shelves are empty.

[earthboundkid]

Toilet paper is bulky for a store, but it's non-perishable, so under normal circumstances people buy a couple of month supply and return to the store when it runs low. The COVID shock meant that everyone replenished their TP supply at once, which screwed up the system by increasing demand x10.

Plus the commercial domestic imbalance.

[croutonwagon]

That and I believe I read that most people used the stimulus to paid down/off debt [1][2]. I would suspect at least a portion of those used that opportunity to also take on more debt down the line as jobs came back

[1] https://www.census.gov/library/stories/2021/03/many-american...

[2] https://www.businessinsider.com/half-of-americans-used-1400-...

[mmarq]

The causes of the lockdown shortages are cultural, toilet paper disappeared in Northern European and English speaking countries, while in Italy (and I think in some places in Spain) yeast could not be found.

[djrogers]

Yeast and flour were gone in the US as well (at least where I live).

[ajsnigrutin]

yeast was hone in slovenia too...

People were afraid they won't be able to buy bread, so they bought flour and yeast... then bought bread, and eventually threw away the yeast.

[macrolime]

Yeast also ran out in Northern Europe.

[watwut]

I can confirm that lockdowns made our family save a lot more money then usual - despite us buying quite a lot of new stuff do to lifestyle changes.

[e-master]

My experience supports that - on public transit alone our family saved more than 5k USD last year, it would’ve more than made up for any equipment I would’ve had to buy (turned out though that I already had everything needed to work from home).

[wiz21c]

because of remote work, I have to heat the house 7 days per week, instead of about 0.25*5+2=3.25 => that's about twice as much. Given the rise in energy cost, this will have a huge impact.

[samarthr1]

At the same time that is largely a problem of the colder areas. In more sane (temperature wise) places, that energy cost is negligible.

Also, that assumes you are the only one (or the other person (s) in the house have very similar schedules) in the house. An assumption which if you have a house wife and a few kids, is largely invalid

[RC_ITR]

What everyone is going to have a real hard time wrapping their head around for the next few years:

We built a highly efficient economy for a set of behaviors. A shock happened that caused a lot people to change their behaviors (probably for a long time, since they've had 2 years of 'practice').

Our economy, which was built for those old behaviors (living in cities, riding public transit, eating at restaurants, travelling internationally, etc.) is doing a bad job of adapting to new behaviors (Living decentrally, driving more, ordering out more, travelling locally. etc.) because we used to think 'People don't change very fast, we can build a just-in-time economy.'

But here's the thing about cycles, soon things will adapt to those new baselines.

Companies will carry more inventory. (until a new generation of FP&A underlings forgets what a pandemic is)

Not enough steel to make enough cars? Here's my amazing ' Airbnb for cars' startup (Hey Sand Hill, did you know, dollar for dollar, they are the most underutilized asset in the world?).

Natural gas extremely expensive? Let me introduce you to renewables, which btw are getting better and better every year.

It may be a painful few years to navigate that transition, and Bridgewater's (weak) point here is that 'hey, consumers are changing behaviors' and nothing more, which to me is a great reminder why this is happening: https://www.bloomberg.com/news/articles/2021-09-02/dalio-s-h...

[rsj_hn]

> Natural gas extremely expensive? Let me introduce you to renewables, which btw are getting better and better every year.

Shutting down a natural gas pipeline that people depend upon just before winter, and then lecturing them about solar panels is not a good look. Artificially increasing the price of natural gas causes famines, it causes food and fertilizer to be more expensive, and it makes it hard for people to heat their homes.

But one thing it doesn't do is increase reliable renewable energy sources. Solar is not a replacement for home heating oil during the Michigan winters. And renewables do not spring instantly into existence out of suffering. Another thing it doesn't do is help the air, because instead of this pipeline, we will need to run 5000 trucks per day from Canada to the Midwest to deliver that natural gas in time for winter. So it's a good thing we don't have a shortage of truck drivers or any supply chain issues.

This idea that we should be punishing end users who need to heat their homes and buy fertilizer instead of actually deploying reliable alternatives is a form of scolding eco-sadism. It may be fine for you to absorb an increase in home heating oil prices, but other people really suffer. It's pure mismanagement and very much has a "let them eat cake" vibe.

> It may be a painful few years to navigate that transition

The pain inflicted on households in the midwest will be returned with interest in the next election. The next time you wonder why it's 2050 and the US hasn't raised any gas taxes or instituted carbon credits, or really done much to reduce CO2 emissions, then remember that to pass a green agenda you need to win battleground states like Michigan, and then remember back to this moment and the kinds of finger wagging lectures that were being delivered all over the country to people worried about how they will heat their homes in the winter.

[throwaway894345]

I sympathize with this, but if climate experts are to believed, we’ve stalled to the point where we have perhaps a decade to get emissions under control in order to meet targets, and most countries haven’t even begun to make significant changes. At some point there will be pain. The question is, “do we want a little pain now or a lot of pain down the road?”. And to be clear, “wearing a coat inside during winter” may just constitute “a little pain” compared to the famines and wars that are likely if we fail to get our emissions to zero in time.

[Freskis]

"we have perhaps a decade to get emissions under control"

Every year we're told it's our absolute last chance. Environmental brinkmanship hasn't work and the tune needs to be changed. Literally no economies are planning for mass famine or wars because no-one actually believes that is going to happen, except religious cults.

[pjerem]

Because every year IS our absolute last chance. Each emitted ton is there "forever" (at least for multiple centuries). Climate change can be stopped (like, paused indefinitely) but can't be reversed.

You are right that there is no absolute deadline. Now we are stuck with our hotter summers "forever". But we are not yet stuck with what comes next.

[Maarten88]

> no-one actually believes that is going to happen

That is the problem exactly. We do not listen to scientists, because it's more convenient to ignore it. And when their models become reality, we'll just blame them for it, as they "knew" and did not prevent it.

[bubbadoo81]

All I'm going to say is always look at where these 'scientists' are getting their funding from. I'm not a climate denier, but realize much of the NGD is really a redistribution of funds. Driving EV machines will still require electricity, most of which is still generated by fossil fuels. Then there's the quagmire of what to do with spent batteries. The Earth has heated and cooled over millions of years, so I really doubt we're at the point of no return.

[adrianN]

Every year the goalposts move a little bit. Thirty years ago the goal was ca. 0° of global warming. Now we're debating whether we can muster the political will to limit warming to 2° (unlikely) or 3°.

[paulryanrogers]

Could it also be our understanding is gradually improving and the externalities are just lagging more than first thought?

[panda-giddiness]

1. The same thing could've been said about the Covid-19 pandemic back in February 2020. In fact, a certain American President said as much. The fact that people are incapable of envisioning major disruptions to their lives does not prove that scientists are wrong; it's proves that humans can be blindsided by their own biases.

2. Countries don't plan their economies half a century ahead. Most struggle to plan beyond the next election cycle.

[datavirtue]

I have was a denier of: CO2 emitted by humans causes global warming until I studied chemistry. Then it hit me. The earth is warming, we are making it warm faster. This place is normally hot...we are making it worse.

The claims sound fantastic if you don't have a solid education. The people you are trying to convince do not have an education that will allow them to understand for themselves. They fundamentally distrust the people trying to convince them. There is no "to be believed." That has already reached the saturation point.

[PeterisP]

In democratic countries, the answer to the question of "do we want a little pain before the elections or a lot of pain down the road?" is quite clear - if you accept the pain now, you'll get voted out and get replaced by someone who will proclaim that the pain isn't needed, promise to undo your measures and kick the problem even further down the road to some other future government.

[wexler88]

Solar is an excellent replacement for home heating oil during the Michigan winters.

The vast majority of people in Michigan are already connected to an extremely efficient distribution network for electricity. The marginal cost of delivering additional energy through this network does not round to zero, it is zero. Meanwhile heating oil is delivered by trucks with a large cost in depreciation, labor, and fuel (further fossil fuels burnt in support of a system which was designed to make economic sense with <$10 oil). Whereas domestically produced oil can never drop below $40-50 a (marginal) barrel at the refinery, and imported oil never realistically below $30 + the cost of fighting forever wars for resources, there is a clear and feasible convergence of the marginal cost of solar energy generated in the Southwest US to $0. All this would make solar a viable replacement even without the role of heat pumps, which reduce the raw energy cost of heating with solar to around 20% of that of burning fuel.

[throwtheacctawy]

I live in Michigan. I have a 5.9kwh solar array. Spring/fall, I can produce over 40kwh/day. Summer heat lowers my production to upper 30-40kwh.

January 2021, I produced 197kwh the entire month.

I know this discussion is focused on heating. But from an electric vehicle perspective; 197kwh is not that much. In the winter, I don't think it would be enough electricity for a homes electric needs + EV or electric heat.

I can make 1MWh over 1 month in the summer. Basically, Michigan has short days in the winter. Snow does sit on top of the solar array until it melts, which robs me of production during sunny winter days.

It wouldn't be impossible to use solar to replace heating oil in Michigan, and the over capacity installed to satisfy winter demand could serve as a "peaker plant" during the warm summer months.

While I know renewables have decreased in costs, I think the costs related to building overcapacity is a hindrance.

[adrianN]

It's not that hard to store solar power as Hydrogen and turn that back into electricity. The end-to-end efficiency is not as good as for batteries, but building something that can hold Hydrogen for a few months is cheaper than building the equivalent amount of batteries.

[wexler88]

It's true that hydrogen is more practical for storing energy for months, but I think that storing energy for a few hours each day between daytime and nighttime (and transporting it from hot, sunny states to freezing, dark ones) is the important problem to solve.

[wexler88]

Did you miss the part where Michigan is already connected by a transcontinental electricity distribution grid to places like Las Vegas (8 average hours of sunlight in January, average temp 9C in January)?

[djrogers]

That’s a gross oversimplification of reality - to the point of outright falsehood.

Michigan can’t get any electricity from Nevada today - they are on different grid ties, and there would need to be a ton of upgrades in the DC-DC and VFT ties between them to get that significant a chunk of electricity sent the ~2000 miles from Nevada to Detroit.

[relaxing]

Can you not get out there with a long handled broom and knock the snow off?

Serious question, I’m debating a similar setup for myself.

[adrianN]

There are roof rakes that you use for getting the snow off of roofs. I assume they also remove snow from solar panels.

[mrep]

So connect to some wind power which in the midwest produces 3x the capacity in the winter as it does the summer [0].

[0]: https://www.eia.gov/todayinenergy/detail.php?id=20112

[rsj_hn]

That's the job of utilities, not individual consumers.

Look, if the government wants to migrate utilities away from gas for heating and replace that with something else, the way you to do that is to have the government build, or contract out to build, the something else that is just as reliable and just as affordable, and then when that is in place, you work with the utility to switch over to the new thing and then retire the old thing. This is called a migration.

Shocking, I know.

The way you don't do it is to adopt some neoliberal obsession with turning everything into a market where end users trying to heat their homes are facing higher prices, and the hope is that these higher prices just cause the utility to transition to something else through the magic of markets.

That's not what markets are good at. Funding big infrastructure projects and coordinating the replacement of one infrastructure with another is the responsibility of government, not markets.

We didn't build our hydro and nuclear capacity by relying on the magic of the free market. We had a planned decision to build this infrastructure as a result of public need, and so we built it, and then the utilities hooked up to it, and the end user got power. We didn't build the interstate highway system by relying on free markets either. When people want to deploy subways, the solution is to build subways, not just tax gas and hope subways just spring up out of the market.

Telling individual homeowners "Well, there is wind power technology out there" is eco-sadism.

It is taking things offline or penalizing them instead of having replacements provided, and we just hope that the penalties will cause replacements to spring up.

This is faith-based energy policy. It is not effective governance, and it is not politically sustainable.

[PaulDavisThe1st]

The Michigan pipeline shutdown has been discussed for most of this year; back in May the MI governor began her attempts to shut it down by revoking easements issued to the operator.

It's not honest to characterize what has been happening in the last few weeks as a last minute action by the administration "just before winter".

It's also not honest to focus exclusively on the costs of the pipeline being shutdown without also considering the potential costs of it staying open. I'm entirely open to someone presenting the case that the costs of shutdown vastly outweigh even the worst projected cost of it remaining open, but if you're going to present that case, do it while being aware that there are people (including the MI governor and various Indian tribes) who don't agree with this assessment.

MI voted for Biden in 2020, its US HoR representation is split evenly between both parties, and both US Senators are Democrats. If you're suggesting that those in favor of carbon credits and higher gas taxes might lose representation if this pipeline is closed, maybe make that case more explicitly.

Also, it's not unambiguously clear that winning battleground states like Michigan is synonymous with winning Michigan, nor that it's necessarily required at all given the steady drifts of some red states into the purply-blue zone.

[unethical_ban]

Are you talking about the nearly 70-year-old oil and gas pipeline "Enbridge Line 5" that bisects Lake Michigan and Lake Huron?

Indeed, it would be great if the United States proactively funded deteriorating infrastructure before it was past-expiration and at risk of collapsing.

[RC_ITR]

Woah, what are you honestly on about?

You can claim that the US is artificially raising natural gas prices, but the exact opposite is true. By chance of circumstance, we've historically underbuilt LNG processing facilities and that is isolating the US market from the rest of the world, so we have some of the lowest natural gas prices in the world right now.

Please take your uninformed takes and cringey political rallying elsewhere, it's not what this platform is designed for.

[dang]

Flamewar comments like this will get you banned on HN. You've been breaking the site guidelines in other places too, unfortunately. That's not cool. (Edit: and we've already had to ask you more than once to stop doing it:

https://news.ycombinator.com/item?id=28378481

https://news.ycombinator.com/item?id=22198190)

If you'd please review https://news.ycombinator.com/newsguidelines.html and stick to the rules, we'd appreciate it.

[mechanical_bear]

I feel like you are being unnecessarily confrontational over a difference of opinion.

[dablweb]

I think they make a decent point, and contributed to this conversation. Calm down.

[Guthur]

I just don't get why everyone maintains JIT manufacturing is bad, it's one of the many reasons we can have such reasonably low cost goods, its efficient.

[grayfaced]

Efficiency at a trade-off of resiliency. If you're talking about discretionary purchases, you probably value efficiency over resiliency. If you're talking agriculture, we should value resiliency over efficiency.

[Gigachad]

So we have benefited from decades of cheap consumer electronics and now people had to wait 10 months to get their playstation at RRP so their proposal is to build double the number of playstations for decades and landfill half of them so in the extremely rare case, they will have just enough.

[grayfaced]

I would consider consumer electronics to be discretionary purchases. So what I suggested is the opposite of that. If disruptions are an acceptable risk, then you should prioritize efficiency. Consumer complaints are meaningless if they don't have a viable competitor to shift their money to.

But we must prioritize resiliency when an economic shock would result in societal instability. I'm willing to pay more for food to be available 100% of the time versus paying 20% less for food to be available 80% of the time.

[KittenInABox]

Isn't that why the US government has longstanding agricultural subsidies, guarantees on prices, etc.? Do we really have a shortage of food?

[88913527]

If hair clippers become mildly more difficult to procure over a 2-year window of an 80 year lifespan, all-in-all the efficiency seems to be worth it. I get 78 years of low prices for goods are that are useful to my everyday existence, but not critically vital and to which there are reasonable substitutes, if I need something in a pinch.

[nitrogen]

Human experience simply cannot be averaged over large spans of times while ignoring the extremes. Dipping into the red means permanent damage. Imagine applying this line of thinking to your bank account -- "sure I spent $500k in two years on fast cars and fancy bars, but averaged over 80 years of paying small amounts of interest, the bank should be glad to make the sacrifice of stability in favor of efficiency."

[1_player]

"Sure I spent $500k in two years, but I've been in the positive and saving for 80 years".

The pandemic was just a blip on the radar, a period of adjustment we still don't understand fully economically, but it was not a Great Depression as it lasted only a couple months and affected just a part of the population (layoffs, but with goverment safety nets)

[_3u10]

umm... this is kind of the purpose of banks... get car now, enjoy car now, pay 3%, inflation is 5%. If you buy the car cash you pay more, and get it later.

Lets take a C8 Stringray @ $100K, if you buy it today, it will cost $107K over 5 years. In five years it will cost you $128K.

[RC_ITR]

Like nearly all good things, it has outsized consequences when taken to the extreme.

JIT iPhones? Sure why not?

JIT ventilators and PPE? Maybe not great. Maybe it’s ok to have some slack in the production of those types of things, you know in case of emergency.

[GekkePrutser]

It also eliminated deep discounts of old stock. A lot of people would have relied on that kind of thing to be able to afford something.

Still, I think for the environment it's a win, not producing anything that's not needed. But in the end most of it would get sold anyway at a discount.

[jnwatson]

Turo* is AirBnb for cars. I’ve used it a few times and it worked well.

* http://www.turo.com

[ryanSrich]

Yeah I imagine Turo is exploding. When I traveled this summer my options for a 5 day rental were $2,200 from all the rental car companies, or $375 from Turo.

[oarabbus_]

How do they deal with insurance? I'm not sure I'd feel very comfortable trusting a random stranger to use my car for 5 days, unless I was sure I'd be paid out in full (or more) if they were to damage or total the vehicle.

[lemax]

Most companies like Airbnb, Turo, Boatsetter (airbnb for boats) offer some insurance they negotiate with an underwriter like Geico. Getting this sort of insurance individually is much more costly or next to impossible, which is why we don't see people short-term renting expensive assets to each other on Craigslist. I imagine negotiating the ability to dole out these sorts of policies at scale with Lloyd's of London or GEICO is fairly arduous, but it seems like one of more key pieces for these companies to successfully get off the ground to me.

[_3u10]

Lloyds et al wants to do business. They are super easy to deal with. Far easier to talk to someone at Lloyds than any major tech company. Only Google would be audacious enough not to let someone spending $100k / month not talk to a human / ban them without warning / send canned email responses to business inquiries at scale.

Check their website, they have this crazy idea where you put in the country where you are and then they give you a list of people to call so you can do business with them. The even crazier thing is the people who pick up the phone aren't humanized robots, but are incredibly intelligent and talented people who want your business and will create tailored plans to suit your needs.

If I want to talk to their President all I have to do is call him.

https://www.lloyds.com/news-and-insights/data-and-research/m...

[mindslight]

The reason you don't see people renting expensive assets to each other on Craigslist is because the nonmonetary transaction costs are too high. When someone wants to rent a car, they're looking to straightforwardly solve their problem in a predictable manner. They don't want to sift through different Craigslist ads looking for one that meets their requirements, emailing to see if it's available, figuring out if the rental is legitimate, etc.

On the lessor's side, since the primary market prefers bona fide businesses you're left with the customers who cannot rent from the primary market. Meaning you're much more likely to end up on the receiving end of abuse (outright theft, vandalism, being an accessory to a crime), or at the very least problematic customers ("I know I rented it for one day but I have to pick up my kids tomorrow so I'll return it Thursday"). A business can absorb such variance, or at least create the illusion of doing so, whereas for an individual such events present a major hassle.

You can bundle all of that transactional risk up into a kind of insurance, but that only works if you're large enough that the insurance company can verify that you're not defrauding them.

[the-dude]

Isn't the crux of insuring anything 'doing it at scale'?

If you are AirBNB, why would you need an insurer at all?

[opportune]

As a company it’s probably better to just deal with 2 years of chaos every few decades than to have tons of unused inventory sitting around all the time.

[robocat]

> Our economy ... is doing a bad job of adapting to new behaviors [because] just-in-time

I have been astonished at how well the world has responded to the shock. Our first world economies seem to be amazingly resilient (although perhaps I am biased by being in New Zealand so I am unaware of what is going on elsewhere).

It seems to me that just-in-time is helping us, and capitalist price signals are working.

So far I personally haven't lacked anything important (albeit, I live in a rich county. I did have to wait a month for an iPad).

Sure there is plenty of fail, but I'm not sure the obvious "better" answers would actually improve anything.

It is easy to criticise given perfect hindsight, and easy to see from my armchair what should have been done.

[danieltanfh95]

We are doing okay because the Chinese supply chain held on even during the pandemic, which is why their orders have grown so much during 2019-2021

[seoulmetro]

If the entire manufacturing line is essential, why would a pandemic create gaps? It was only over a year or so of higher demands. Nothing dramatic. 5 years would be hard. 1 year just uses a bit of warehouse space for most consumer items. No one ever stopped making stuff, and they started shipping more where they could.

Most people who couldn't get what they wanted would have no way to prove that. Whereas people who got what they think they couldn't, would have that memory strongly planted and even shared.

[_3u10]

Natural gas isn't expensive. I pay 7.2 cents USD per kW/h and it's still cheaper to heat my house with natural gas. Given that the world is switching to electric cars I only foresee it getting even cheaper (comparatively) given how much hydro will need to be built to service the energy needs of the electric car market.

[kevinmchugh]

Didn't more Americans already live in suburbs then cities before covid? What percent of Americans were regular public transit riders?

[okhobb]

Re: % transit riders, seems like not a lot except in NYC: https://www.pewresearch.org/fact-tank/2016/04/07/who-relies-...

[RC_ITR]

8 Million people, which, while a small % of population, is huge compared to the c. 100mn cars that get sold globally per year.

And similar to the suburbs point, sure the suburbs existed before COVID, but they are becoming more heavily utilized (extra bedrooms turned to offices reduces the supply of housing) at the same time as an uptick in demand.

[edmundsauto]

Looking for “why” is often a path to becoming more fragile and/or frustrated.

I do a lot of split tests (a/b testing). People always want to know why a treatment worked. I believe this is human nature.

However, the answer to any specific situation is generally unknowable. I may have only changed one color and gotten way different results, but there could be a billion or a trillion situation dependent factors that cause the situation to happen. It is pure chaos.

But our brains latch onto our cognitive biases to scaffold a reason, such as “because people find blue more reassuring than red.”

This is not generalizable, but more importantly: it probably doesn’t matter in order to resolve the decision that was the reason for the test.

Since then, I have accepted that seeking the “why” is generally a fools errand, unless you are doing pure science in a controlled, closed-input system.

That’s the beauty of not asking why. It’s a competitive advantage.

[mindslight]

What you're finding with A/B testing is local maximums. Which might make sense when your sole goal is squeezing a few more pennies out of a mundane business. But generalizing this to all of existence is sorely mistaken.

Asking "why" is the act of cognition. Discerning structure, compression, building a model (science). Then applying that model to new territory (ie engineering), to achieve better gains than undirected walk. Eschewing this is basically nihilism, and it's far too common these days.

[edmundsauto]

Asking why can lead down two paths. In a system where it's possible to understand the "why" (often overlaps with "hard" sciences), it is crucial.

In fields where the inputs are unknown, obscured, non-linear, and sometimes non-deterministic: asking "why" is going to create cognitive biases that are very difficult to break.

- Why did the Soviet Union fall?

- Why did Trump lose in 2020?

- Why did I eat a cheeseburger when I'm trying to lose weight?

Those all turn into narratives that may or may not be correct, but are usually self-reinforcing. Confirmation bias also means we evaluate the "why" question as follows: "given what I know about this situation, and how I think things generally work, can I see this singular narrative as being true?" That leads to blindness of other possible interpretations, as well as other cognitive dysfunction.

To be a little cheeky - that is why commentators on politics, economics, social sciences, psychology... are full of shit.

Asking why may be the act of cognition, as you say - but my take is that the act of cognition itself will not lead to understanding the truth, or better decisions. Making up fairy tails is also cognition but does not help us build mental models to better understand the world around us.

[Spooky23]

It’s a whiptail effect. Shifts in demand and supply cascade and create unpredictable effects.

For example, the rush on toilet paper triggered more production, which reduced pulp supplies, which constrained golf cart supply.

Why? Seats are made from particleboard, made from pulp. Plus, golf courses bought more carts than usual due to lockdown restrictions.

[wexler88]

Was the particleboard really the operative constraint? Or is the explanation about extra demand the correct one?

It seems plausible that golf cart manufacturers aren't ready to handle extremely spiky demand. Also, that the toilet paper explanation begins as a joke or a guess, and takes hold because everyone likes it as a story.

[Spooky23]

Check out:

https://charlestonbusiness.com/news/automotive/80346/

I don’t have an academic paper, but I got the same story from several pretty big rental providers. (I needed about a dozen golf carts for a project)

It was crazy - the rental places had no inventory because gold courses weren’t offloading older gold carts due to the supply chain issues.

We ended up buying a smaller number of bigger utility vehicles from Bass Pro Shops, of all places! The techs had fun with that.

[rustyminnow]

> Was the particleboard really the operative constraint? Or is the explanation about extra demand the correct one?

Probably both were contributing factors, along with a slew of other things.

This particular story does seem like it could be a folk-tale explanation, but it's not really about golf-carts - no one cares about golf-cart shortages. It's just a simple example of a broader issue for people to easily grasp. Even if it isn't particularly accurate, the same thing is happening in/across just about every industry

[okaram]

I may be wrong, but I don't think we need anything special to explain this, other than COVID.

Covid came, the economy died. No travel, restaurants, theaters etc, plus work clothes, beauty products ... Now covid is less of a problem every day, and those things are coming back ... we have a huge demand shock.

[nuerow]

> Now covid is less of a problem every day, and those things are coming back ... we have a huge demand shock.

I suspect that stimulus checks may have also played a role. Those who fall below the poverty line finally found themselves with a little disposable income to spend on basic everyday things, thus driving up demand. Stimulus check detractors prefer to spin this as inflation but you only get that with a generalized increase in demand for basic consumer goods and services.

My personal theory is that this effect is driven mainly by poor people finally getting a break. Those who were already well-off tend to either not change their consumer patterns with small changes in disposable income, or tend to spend it with one-off expenses such as luxury goods and services, or even dump it in risky investments like crypto as we've been seeing in the ongoing bull run.

[sleepysysadmin]

>Maybe everyone can afford a jet ski all of a sudden? No, the stims didn’t really do /that/ kind of wealth expansion.

US money supply M0 in late 2019 was low around 3.5 trillion.

Today it's around 6.4 trillion. This doesn't equate to 100% inflation, but it certainly equates to affording jet skis.

M2 money supply is sitting around 21 trillion and ought to be more around 16 trillion. This is the equivalent to 31% locked in, happening within a few years inflation. Though looking deeper than this, easily 40% inflation locked in.

You are incentivized to buy a jetski even on cheap debt because as this inflation erases the debt. The asset even with depreciation will end up being more expensive than you bought it selling used.

In terms of 'wealth expansion' it's sitting around 400% right now.

[fanzhang]

Your hypothesis of "bullwhip effect" would predict that global inventories are increasing (thus causing a surge in demand). However it doesn't square with all the graphs in the article that show inventories across the world at global lows.

Overall, I believe the Bridgewater story to be more correct.

[Scandiravian]

I don't think the bullwhip would predict global inventory increases, quiet the opposite from how I read the parent post.

The article shows global lows for raw materials, but production for China is up 20% and exports are 40% higher.

I can't find any reference to retail inventories in the article, but I think some of the stock could be found there - though I imagine that a lot of it could simply be stuck in transit.

I think you and OP agrees - the parent post tries to answer the why of the situation, which the article doesn't spend much/any time on

[tsywke44]

Remote work. Hundreds of millions of well-off middle class people gained 2 hours of extra time and energy per day from not having to commute.

Thats equivalent to a population boom.

[prawn]

And that puts more people at home looking at their surroundings thinking about how it might make sense to upgrade. "Well, I'll be looking at this place another 7+ hours a day." Which then puts demand on various hardware supplies and tradespeople.

In our case, with the real estate market so hot, it makes sense to upgrade. Selling and buying a house has a stamp duty here of $50k on a $1m house, meaning it's fairly easy to justify $50k on internal renovations (updating bathrooms, flooring, etc) rather than upping and moving.

[credit_guy]

I think they address the why:

  “Household balance sheets are now in a materially better state than they were pre-pandemic, as MP3 created a significant amount of wealth, pushing up the value of assets like equities, housing, cryptocurrencies, and so on. These gains have been broad-based across the economy, not just in the top decile or quantile. Ongoing stimulative financial conditions have further lowered debt service costs, and incomes have also benefited as economies have reopened. In short, households are wealthy, flush with cash, and ready to spend—setting the stage for a lasting, self-reinforcing surge in demand.”

[zhdc1]

This is one of the factors for current inflation, but it's not sustainable over the long run. Consumers will happily over-leverage themselves to pre-pandemic debt levels, and we'll be left in the same long term situation as before (bad demographics and too much money chasing investment opportunities).

[xadhominemx]

Overall expenditures are still pretty close to pre-covid trend. Stimulus prevented aggregate expenditures from falling below trend, as they have in previous economic shocks. What’s happened is people have shifted spend from services (particularly healthcare and travel) to goods.

[vmception]

Alot of people really didn't pay their rent with their stimmy's and were able to "afford a jet ski" and experiences and have done that.

This isn't meant to be a conservative talking piece, a lot of people just reacted to the lack of consequences and futility of their prior aspirations.

Also, Congress acted haphazardly and sent some forms of stimulus to anyone with an AGI below like $75k. AGI is influenced by how many deductions you make, not "income", as widely reported. Many people that were not cash poor but had or rolled forward deductions had $0 or negative AGI and automatically received stimulus payments.

And we all know how the Paycheck Protection Program went. That was an anything goes lottery.

It all are factors. I'm going to go with Ray Dalio on the weighting of the factors. Disruptions, readjusted priorities by individuals, and capital misallocations from what people want to do and how the capital entered the market.

[QuarterReptile]

I didn't see this yet, so I'll throw in my own experience: with prices inflating in a widespread way, I want to lock in my losses now. Yes, you could point out that investments will probably continue to outpace inflation, but I have never in my life triggered a taxable cap gains event, so for all intents and purposes investment is a one way street to me (money never comes out.) So while my two central air systems continue to work, I'd rather pay 10K to replace them now than 15k in a year when they finally do break. And while I feel it's silly to be driving around a minivan for just the one kid and one dog, it was better to have bought at the end of 2020 and feel silly until kid #2 comes along, rather than be sitting on the wrong end of the enormous swing in car prices.

[zhdc1]

> What this doesn’t really address is the why?

Consumers base purchasing decisions on their monthly outlays. When interest rates go down, they can afford more in payments, so they increase their consumption until their expenses match what they can afford. A good example here is housing.

The US and many EU states provided an under-appreciated amount of stimulus during the COVID-19 lockdowns. Even when this wasn't given directly to citizens, as it was in the US, it still trickled down from businesses to labor through steady wages. It also kept the wheels of the economy greased by keeping businesses out of bankruptcy, so when the lockdowns ended, the unemployed could return to work.

The steady wages piece here is key, because the lockdowns led to a significant reduction in daily expenses. So, i.e., if you had 5K in monthly expenses that were matched by 5K in income, for a non-negligible amount of time, you had 5K in income going against 3K in expenses. Even without direct stimulus payments, this led to a significant increase in average savings.

Now that the lockdowns are over, consumers - who now have money in the bank - also happen to have access to extraordinarily low interest rates (too much money chasing too few investment opportunities). Because of post-COVID structural issues, there is also an increase in the demand for labor, so wages are also increasing. And there's the much touted structural part of all of this.

We've never, ever (at least, from the early 20th century), seen as large of a reduction in global peacetime economic activity as we did in early-mid 2020. The closest example out there is the end of WW2. We've also never seen global economic activity drop, and then rebound, in such a short period of time.

> Maybe everyone can afford a jet ski all of a sudden? No, the stims didn’t really do /that/ kind of wealth expansion.

Getting back to your post, debt allows leverage. Consumers now have either lower monthly expenses (if they used their savings to pay off debt) or they have more money in the bank to use as a down payment. To use your example of a jet ski, a Yamaha EX at $7,200 USD can be purchased with 1K down and a 60 month repayment plan. The monthly payments will be $118 USD at a 5.2% (high) interest rate. So, the average American consumer, using only government-provided stimulus checks (3.2K per person), can afford the down payment along with almost two years of monthly payments for a jet ski before they have to start paying from their income.

Can they afford the jet ski outright? No, but consumer purchases are based on short term impulses, and the US stimulus checks, along with easy access to low interest debt, certainly pushes the equation towards consumption.

[R0b0t1]

> Even when this wasn't given directly to citizens, as it was in the US, it still trickled down from businesses to labor through steady wages.

Yeah, no. A lot of it just went into stock buybacks and other navel gazing.

[hooande]

This is excellent analysis, thank you

[yesbut]

Also, a lot of suppliers and shipping companies are trying to recoup their covid losses from 2020. They have increased their service costs, which causes the next guy in the chain to increase their costs, etc.

[acje]

In networking we have TCP global synchronization. This is probably going to be similar for a couple of cycles, but for goods.

Also LEAN is the practice of globally optimizing a system, with the less known drawback of making it globally fragile. We have seen this before when supply chains are disrupted, like the flooding in 2011 disrupting HHD's. https://spectrum.ieee.org/the-lessons-of-thailands-flood

[snarf21]

Yeah, this is what happened with toilet paper writ large. Then you add in the supply shocks and it is exacerbated. The other issue is that the ports and trucks staffing was already short handed and then they backed off hard during covid. Either prices will rise enough to attract the workers back or we'll just be in this new world for a long time. I definitely can see some business like fast food switching to a drive-thru only model. You need less staff and don't have the interior maintenance costs. Previously that would have hurt their business but people are now used to the wait. I see lines of 20 cars at all fast food drive-thrus most of the time now.

[VirusNewbie]

>No, the stims didn’t really do /that/ kind of wealth expansion.

Of course they did, but indirectly. By propping up the economy by keeping an artificial demand for treasuries, it caused a securities bubble.

I bought a bigger house, and so did plenty of my friends, and so did everyone else my real estate agent was working with, which meant I needed a new couch, bed, desk, curtains, speakers, tv, etc.

All of the move up buyers who moved some of their money from the stock market into housing likely also spent money buying more 'stuff' for the bigger space.

[simonh]

>Yeah there’s more money floating around, so perhaps more people want to spend it, but why?

Even if they don't spend the money, it still drives demand. That's because investment also drives demand. How do you get a return on investment? If you invest in a company, it will expand. Even if you put money into property that will drive renovations and new construction. All profits from investment come from profitable economic activities somewhere down the chain.

[lvl100]

I’d say wealth effect from people seeing their retirement account ballooning in such a short period of time. The demand will last for awhile especially in places like EU where the stimulus was substantially higher than in the US for lower middle class.

By the way, if we DON’T see sustained inflation from this level of stimulus, that should raise eyebrows and we should really question the role of CBs and efficacy of monetary policies.

[ur-whale]

> or even need that much more stuff,

That's a fairly rich-world centric view of things. I suspect the majority of humanity hasn't reached the point where "they don't need much more stuff".

[omalleyt]

If that were true, inventories ("domestic stock") should be very high. Actually, they are at historic lows

[pfortuny]

When money has no value (rates=0%) you are better off spending it rather than saving…

[cslarson]

Crypto has added a lot to aggregate wealth over the past 12m.