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re: WSJ: Consumer Appetite for Cars, Homes Boosts U.S. Economy
Posted on 7/15/20 at 11:29 am to TheFlyingTiger
Posted on 7/15/20 at 11:29 am to TheFlyingTiger
quote:
translation: the bubble is the whole economy now, not just housing
I think it's more of the start of a bullwhip effect when it comes to durable goods. The market was shut down for a couple of months, so there's pent up demand for these products. There's also a lack of supply since the factories that provide them were also shut down.
So now there's a temporary spike in demand and shortage of supply. They are running overtime to build more cars and trucks now - but once they meet the spike in demand, they will need to go back to normal output or risk oversupply.
1
Posted on 7/15/20 at 12:23 pm to dewster
quote:
think it's more of the start of a bullwhip effect when it comes to durable goods. The market was shut down for a couple of months, so there's pent up demand for these products. There's also a lack of supply since the factories that provide them were also shut down.
So now there's a temporary spike in demand and shortage of supply. They are running overtime to build more cars and trucks now - but once they meet the spike in demand, they will need to go back to normal output or risk oversupply.
That is definitely the case in the short term. In the long term, however, production is what drives in economy, not consumption. There are many businesses that have closed down and will not reopen. The lack of production whether it be in services or goods themselves will spell a down turn regardless. It will take a decade before we realize the actual effect all of this has had. Some industries will take longer.
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