Mr. Demand and Mr. Supply were constantly jogging along the Economic Trail. Most of the time, they ran in tandem, at about the same speed. But sometimes Mr. Supply ran ahead of Mr. Demand and often the roles were reversed. But then, they would instinctively adjust their pace to get back into balance once again.
Mr. Price always accompanied Mr. Demand and Mr. Supply on
the trail. Mr. Price could be unstable so instead of jogging he rode a bicycle.
When Mr. Demand got ahead of Mr. Supply, Mr. Price would pedal faster to get
ahead of Mr. Demand. Then he would force Mr. Demand to slow down so Mr. Supply
could catch up to him. When Mr. Supply ran ahead of Mr. Demand, Mr. Price would
drop back, causing Mr. Supply to slow down and Mr. Demand to speed up. In both
circumstances, as soon as Mr. Demand and Mr. Supply were back in sync, Mr.
Price could be found pedaling right beside them.
Everything was moving along fine on the Economic Trail
until March of 2020 when both Mr. Demand and Mr. Supply were infected with
COVID-19. Both guys immediately stopped and sat down on the trail to recover. Fortunately, Mr. Demand had only
a mild case of the virus. Soon he felt much better and started running again at
a modest pace. Unfortunately, Mr. Supply
got much sicker from the virus. He lay weak and dormant for a couple months. He
finally got up and tried to run but stumbled along at a slow pace.
Mr. Demand continued to recover and picked up the pace. His
Uncle Donald even gave him some strong coffee to help his recovery. Mr. Demand was
now running much faster than still sickly Mr. Supply, and the gap was widening.
Mr. Price had also been infected but was asymptomatic. He had stopped on the
trail, waiting for Mr. Demand and Mr. Supply to recover. He had followed Mr.
Demand back on the trail and expected Mr. Supply to follow them, but he had not.
Now Mr. Price was pedaling faster but didn’t know quite
what to do since Mr. Demand was not slowing down and wasn’t concerned at all
that Mr. Supply was falling so far behind. The gap between Mr. Demand and Mr.
Supply had not been this wide for many years.
Even though Mr. Demand appeared to be healthy, his Uncle
Joe was concerned he was not running fast enough. So, Joe gave him an energy
drink, a stimulus, to get him to run faster. But no one was concerned with the
condition of Mr. Supply. Even though Mr. Supply was increasing his pace, Mr.
Demand was still running much faster.
Uncle Joe was so happy that the first stimulus worked so
well, he jolted Mr. Demand with a second energy drink. Now Mr. Demand was
sprinting at top speed. However, even though Mr. Supply was trying to run faster,
there were obstacles on the trail which slowed him down. He asked for people to
work to help him run faster, but they were too distracted by Mr. Demand’s
stimulus, to aid Mr. Supply. Others declined to help due to the persistence of
the pandemic. And some potential workers
had left the trail altogether. He also needed a new pair of running shoes, but
he couldn’t get them due to a shortage of silicon.
So, no matter how hard Mr. Supply tried to catch up, he
could not, and Mr. Demand was now miles ahead of him. This motivated Mr. Price
to pedal faster than he ever had since the 1980’s. He needed to get ahead of
Mr. Demand and slow him down, so Mr. Supply could catch up. But he was pedaling
so fast that his tires got overheated and are now highly inflated, and he fears
a blowout, which could lead to a crash.
And so it goes ……
This post originally appeared in the FTR blog. For more information on FTR, the leader in commercial freight analysis and forecasting: FTRintel.com
