COCKEYSVILLE, Maryland — People would go to Valley View Farm to buy five tomato seedlings and end up with $5,000 in patio furniture.
This year is different. After a record explosion of sales in March, the showroom floor is almost empty of outdoor chairs, tables and chairs for people to buy.
The garden supply store in suburban Baltimore is waiting six months for a shipping container from Vietnam for $100,000 worth of wicker and aluminum furniture. Half the container has already been sold to customers by showing photos. The container was supposed to arrive in February, but it reached US waters on June 3 and is docked in Long Beach, California.
“Everyone is so far behind right now,” said 62-year-old John Hessler, patio section manager. “I’ve never seen anything like this.”
The Biden economy is facing the unusual challenge of possibly being too strong for its own good.
Contrast the fastest growth in generations at over 6%, yet a constant delay for anyone trying to buy a wide mix of furniture, autos and other goods. This almost mirrors the recovery from the Great Recession of 2007–2009, which was hit by slow growth but also immediate delivery of almost every imaginable product.
What ultimately matters is that demand remains strong enough for companies to catch up and reduce long waits.
“It’s a very good problem for the economy,” said Gus Faucher, chief economist at PNC Financial Services. “You’re better off having too much demand than too little, because too little demand is a recipe for an extended recession.”
Republicans tout shortages and price increases as signs of economic weakness, while Biden may counter that wages are rising at a pace that helps the middle and working classes. But the real challenge goes far beyond politicians’ blunt talk for an economy driven by a mix of market forces, tensions with China, shocks from natural disasters and the unique nature of restarting the economy after a pandemic.
As America approaches the middle of summer from the 4th of July weekend, the outdoor furniture industry provides a snapshot of the dilemmas facing the economy. A series of shortages have depleted warehouses and prices are rising more than 11% annually as Americans resume BBQs and parties after more than a year of isolation. Industry is not getting workers, truck drivers and raw materials – not just government spending but the result of overcrowded ports, an explosion at an Ohio chemical plant and the devastating snowfall that hit Texas in February.
Patio furniture makers interviewed by the Associated Press say they expect a supply squeeze in 2022 or 2023 — meaning it could remain a political flashpoint, even as the broader risk of inflation continues to loom large, according to several Federal Reserve officials and Wall Street experts. To be expected by street analysts. The shortage reflects the mixed effect of stranded shipping containers, a shortage of truck drivers, and the deadly explosion in April at the Yenkin-Majestic Paints and OPC Polymers plant in Columbus, Ohio, that depleted domestic supplies of furniture pieces.
Well aware of the challenge, the Biden administration has prioritized fixing the supply chain. It is trying to direct more money to make the US power grid and other infrastructure more resilient against extreme weather events as part of a bipartisan deal with Senate Republicans.
“You saw what happened in Texas this winter: the whole system collapsed in the state,” Biden said in a recent Wisconsin speech. “That’s why we have to act.”
Administration officials expect supply chain issues to self-correct, although they are cautious about claiming a specific time frame due to the unprecedented nature of the recovery from the pandemic.
He noted that when the pandemic began the toilet paper shortage was fixed within weeks as factories could ramp up production. But in this case, Biden’s White House sees the problem in a global context, with many of the challenges in Asian ports, not a problem that is purely domestic in nature.
Republican lawmakers have specifically pinned the blame on Biden’s $1.9 trillion coronavirus rescue package, saying the shortfall is causing inflation that behaves like a tax by eating into workers’ wages and savings. Outdoor furniture companies say finding workers has become a challenge because of the greater unemployment benefits, but they don’t buy into the Republican line that government dollars have caused a permanent price bump.
“The Biden inflation agenda of too much money chasing too little stuff is doing big damage to hard-working families,” House Republican Whip Steve Scalis of Louisiana told a June hearing.
Reality isn’t so simple for William Bev White III, who founded Summer Classics, an Alabama-based furnisher whose exterior products look like they belong next to a Gilded Age mansion or terraced hotel along the Italian Riviera . He summarizes his problems as the three F’s: foam, fabric and freight.
“The freeze in Texas shut down two plants that make chemicals that make foam,” he said. “These plants were not able to reopen from mid-March till the end of March. And the supply stopped. I am not sure how someone who is in the business of upholstery can make up to 40% to 60% of the required products. “
His company can produce 3,500 outdoor cushions a day, but he was unable to get supplies for most of the year due to snow shutting down the Texas power grid. It has revenue growth of between 40% and 60% on an annual basis and it is difficult to judge how much production needs to be increased to meet that demand and whether that demand can be sustained.
He is more concerned about what his Chinese furniture suppliers are charging than the prices at home. Their prices in China have risen 26.5% since January, sometimes retroactively on orders that were already in shipping containers.
“It’s not sustainable,” White said.
In many cases, companies are simply trying to absorb the high cost. Eric Muller, CEO of Cincinnati-based outdoor furniture and home entertainment chain Watson, said he wants to protect his store’s reputation as providing value. He does not see the situation as paralleling the mix of stagnation and inflation of the 1970s that helped oust Jimmy Carter from the presidency after one term.
“It’s not the 70s,” he said. “We still have stuff that’s reasonably priced.”
While he believes that generous unemployment benefits have stymied hiring because people can earn more by not working, Mueller also sees inflation as a spillover from the pandemic. Some people were unable to work due to illness or their shifts were cut. With the reopening of economies the rush for supplies happened too fast for factories and shipping firms that have yet to return to their previous capacity. All of them were combined with the United States that welcomed the relief of simply relaxing by the pool with friends after a brutal year.
The problem is one of market forces that are beyond the authority of an individual, even that of the US President.
“You have such an extreme demand because of a unique situation that was out of everyone’s control,” Muller said.