. . . supply chains, that is!
While the Rs were blaming the pandemic stimulus measures for inflation, Biden knew inflation was a supply chain problem. And he fixed it, with carrots, sticks — and careful oversight.
Here is news from November 2021 showing amazing progress from just the first few months of the work on the issue:
Yesterday, the Ports of Los Angeles and Long Beach offered preliminary estimates of 849,000 loaded containers imported in October. This brings the total number of containers they have imported between January and October to 8.6 million, which is 16 percent more than their previous record over the same period in 2018. The ports also reduced the number of containers sitting on the docks for more than 9 days by about one-third over the first two weeks of November. . . . We continue to monitor the ability of the goods movement supply chain to get goods from the ports to store shelves.
Why just monitor? Can’t he control it? Dark Brandon knows the importance of collaborating with the private sector!
The goods movement chain is controlled by the private sector, which is why we have continued to work closely with the private sector to drive improvements to the system.
But he also knows how to nudge them:
The reduction in long-dwelling containers was due, in part, to a new congestion fee the ports imposed on ocean carriers. The carriers have been so successful at clearing the docks that the ports announced this week they would postpone charging the fee. Reducing the number of containers sitting at the port improves overall efficiency by creating more space for containers to be unloaded more quickly and giving trucks more room to maneuver.
He had already pointed out the need to nudge the private sector in July 2021:
The President called attention to these problems in his Executive Order on Promoting Competition in the American Economy, which encouraged the Federal Maritime Commission to vigorously enforce the prohibition against ocean carriers charging unfair fees to exporters and importers.
And to keep things moving, in January 2022 Biden made a Historic Investment to America’s Port and Waterway Infrastructure:
Modern and resilient infrastructure strengthens our supply chains, supports U.S. competitiveness and economic growth, and protects communities from the accelerating impacts of climate change. Yet, decades of underinvestment and neglect have left our nation’s infrastructure — from ports and waterways to levees and dams to the aquatic ecosystems that supply our water and energy — vulnerable to climate change and struggling to keep up with our strong economic recovery from the pandemic.
[In response,] President Biden secured unprecedented investments through the Bipartisan Infrastructure Law for the U.S. Army Corps of Engineers to increase climate resilience and make long-overdue improvements at ports and waterways, as well as additional funds to help impacted states and tribes recover and become more resilient to natural disasters. The Biden-Harris Administration invested more than $14 billion of this funding in fiscal year 2022 for over 500 projects across 52 states and territories. These key projects strengthened the nation’s supply chain, provide significant new economic opportunities nationwide, and bolster our defenses against climate change.
And in February of 2022 he made another move! He announced a historic agreement between the Department of Justice and the Federal Maritime Commission (FMC) to make sure that large ocean freight companies cannot take advantage of U.S. businesses and consumers.
For example:
The FMC has established a new audit program backed by an audit team to address complaints about carriers charging unfair fees, demanded justification from the carriers about their fees, launched 42 cases investigating port congestion charges, and took steps to address barriers to filing complaints at the FMC and to prevent retaliation against complainants. It also launched a new data initiative to identify data constraints that are adding to supply chain congestion. This month, the FMC also sought comments on reforms to how carriers charge shippers fees.
In June 2023, Biden was able to issue a “report card” detailing giant strides in fixing supply chain problems:
The Biden-Harris Administration made supply chain resilience and response a top priority on day one, collaborating with industry and labor to address acute shortages and bottlenecks throughout the economy. As a result, critical supply chains are significantly more fluid and resilient than they were when the President took office. Today, we see increased access to transportation and warehousing capacity and equipment, solid throughput at the ports, improved delivery times, greater ocean shipping reliability, and steady declines in transportation costs.
Here are some of the deets:
- The nation’s ports moved record levels of cargo in 2021 (25.8 million units) and 2022 (25.5 million units) through increased collaboration across the logistics industry, which has helped reduce the significant backlog of anchored vessels from a peak of 155 to roughly a dozen in May 2023.
- 92 percent of goods at grocery and drug stores are in stock—above where they were pre-pandemic.
- There are over 120 new trucking firms with Registered Apprenticeship programs to help attract, train, and retain talent in this critical sector.
- The New York Fed’s Global Supply Chain Pressure Index has eased off its highest level on record. This has happened alongside a historic surge in East-West ocean shipping prices, which have fallen by roughly 90 percent since their peak in September 2021, as well as a 30 percent drop in gas prices since their summer 2022 peak. Moreover, annual core goods inflation has fallen more than 65 percent since its peak in February 2022.
And what effect did all this have? Oh, it just saved the economy. As the Council of Economic Advisors explained last August:
One of the most important and interesting trends in current macroeconomics, one to which President Biden has often referred, is the fact that, contrary to conventional macroeconomic models, inflation has fallen while unemployment has stayed historically low.
This is surprising because a long-held conventional view among many economists is that unemployment and inflation move in opposite directions: if one goes up, the other should go down, a trade-off referred to as the “sacrifice ratio.”
The sacrifice ratio framework (also known as the price Phillips Curve) inherently emphasizes the economy’s demand side, but part of what drove inflation up in the first place was disruptions to the economy’s supply side, [and] part of what is driving inflation back down is the unsnarling of formerly snarled supply chains. . . .
When bottlenecked supply chains begin to unsnarl, goods prices can rise more slowly or even fall outright for some products. This effect on goods inflation is surprisingly persistent. The chart below shows the effect over time of a sudden fall in the New York Federal Reserve’s Global Supply Chain Pressure Index (GSCPI), a summary measure of supply-side bottlenecks. When the GSCPI falls one index point, indicating less pressure on supply chains, core goods inflation declines and then generally remains more than half a percentage point lower even two years later.
Conclusion: As the White House summarized it last November:
The pandemic revealed significant vulnerabilities in our nation’s supply chains. The Biden-Harris administration initiated an ambitious work stream across government to improve and lastingly repair these linkages. Together with industry action, these efforts have helped to unsnarl global and domestic supply chains, leading to a broad re-normalization in the flow of goods, along with significant disinflation and even deflation.
Is there still more work to be done? 100%! Lots more work. But Biden did more than many people guessed could be done. He deserves a lot of credit. AND he deserves to be re-elected.
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