The madness of hoarding toilet paper leaps into the economy: the new post-pandemic strategy of companies. Companies are stockpiling materials to prevent another shock. Western economies are increasingly acting like China.

Ethan Harris, an economist at Bank of America, notes that the strategy of hoarding toilet paper when the pandemic broke out could become a global trend. The expert points to the feeling that more and more companies are buying materials, components and other essential utensils, in order to manage possible future supply shocks like the one seen in March 2020.

But this is not the only investment bank to make an observation in this regard. In a commodities note published last week, Goldman Sachs analysts already indicated that China “is no longer the marginal buyer that dictates price , as has been the case for much of the past two decades, it is now being displaced. By Western Consumers “.

Western economies are increasingly acting like China of the past, accumulating large reserves of essential commodities to guard against price spikes and shortages. Although Goldman analysts did not mention toilet paper in their note, the thought process is similar.

Demand has far outstripped supply thanks to a mismatch between the order needs of paranoid consumers and the ability of suppliers to increase production. It should be noted that this production capacity has increased considerably in recent years as most companies have perfected just-in-time supply chains.

So what does the new demand-based accumulation strategy mean for the economy? Bank of America economists point out that we should identify the impact of supply-side shortages on economic data, rather than assuming that supply-side activity is purely a function of demand.

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *