Why is everything getting so over-priced?
In: Economics
The main reason is that shipping containers are not being sent back to China and other major production countries naturally.
In years prior, China took a lot of low grade plastics back for recycling, which caused shipping containers to naturally make their way back to China. However, they stopped that program in late 2019/early 2020. As a result, shipping containers are having to go back to China empty. This essentially means that the cost of shipping something out of China also now involves the cost of importing a shipping container to China.
A few reasons.
1) the supply of many goods and services became scarce when the world basically shut down during the pandemic. Scarcity creates price increases.
2) vast amounts of brand new money (trillions of dollars) we put in the hands of consumers. This lead to a surge in demand for goods and services. When demand goes up so do prices.
3) many people capable of work are getting paid to not work via unemployment and pandemic related aid, some are/were also stuck taking care of of children who couldn’t be in school. This has created a labor shortage. When there is a labor shortage the cost of labor goes up, and labor costs are usually a large driver of the costs of goods and services.
Its been a real perfect storm for inflation, and inflation means the cost of everything goes up. This is why government can’t just solve money problems by making more money.
What’s your reference of over-priced? Things are more expensive than, say, 20 years ago, but income has also gone up drastically (in the US at least).
For example, [in 2000](https://www.census.gov/library/publications/2001/demo/p60-213.html) the median household income in the US was only $42,148.
[In 2019](https://www.census.gov/library/publications/2020/demo/p60-270.html) that median household income in the US is now $68,703.
So in 19 years, the median household income in the US has risen about 63%, would you expect “everything” to *not* go up in price as well despite the average household bringing in significantly more money?
As an additional note, inflation pays a large part in this….inflation alone pushes that $42k income to around $62k in todays dollars.
The elephant in the room is that a lot of people’s income is not keeping up with the rate of inflation. A prime example is rent rates that on average have increased 3% per year from 20 years ago but salaries lag behind it.
So over a longer period of time in general people are starting to afford less things with their incomes. This trend began in the 70s.
Late stage capitalism. This trend will accelerate until the people working the lowest paid jobs can’t continue to pay rent and make a living. Then it all collapses. Have as much fun as you can in the meantime.
Due to COVID and other recent factors (that ship stuck in Suez Canal), there are shortages and supply chain hiccups of things like computer chips for cars, lumber, steel, etc. Those higher material costs and parts shortages reduce supply, which when demand is the same or higher, drive up prices. Many manufacturers expected to see demand drop for goods, so they reduced orders for materials and parts, only to see demand increase in many cases due to stimulus money, unemployment benefits, changes in lifestyle. And plant shutdowns, distancing requirements, sanitation protocols, etc. slowed production down, too.
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