The coronavirus pandemic warped global supply and demand patterns, causing a mismatch that has driven prices higher. Bringing an end to the pandemic will help return those patterns to normal.
Now, President Biden is bringing new plans to stop inflation, but experts say these could have a limited effect but won’t be felt for some time.
First, the most visible steps Biden has taken so far to bring those prices down are by unclogging the supply chain.
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The administration has tried unclogging bottlenecks at US ports, where container ships are waiting to unload. He announced last month that two of the largest US ports — Los Angeles and Long Beach — would operate 24 hours a day. And Biden announced in Baltimore this week new funding for expanding port capacity across the country.
However, there is a shortage of truck drivers to transport them around the country once goods get offloaded.
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The administration is weighing steps like lowering the minimum age for truck drivers or trying to increase their pay to attract more drivers. And officials have not ruled out using the National Guard to step in and begin trucking goods.
Next, the admin needs to address the worker shortage via immigration.
Comprehensive immigration reform, which Biden could forcefully advocate for, would help ease the shortage of workers and thus the inflationary pressures, economists say.
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Biden also needs to address the spike in energy prices. The White House has not ruled out tapping the Strategic Petroleum Reserve, the stockpile of 600 million barrels of crude oil stored in underground salt caverns in Louisiana and Texas.
However, that could have only a limited effect because of how much oil can be released at a time. And it doesn’t solve the underlying problem: Supply isn’t keeping up with rising demand.
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But, in the end, what started high inflation is what will end it: The Covid-19 pandemic.
When demand for services returns, workers return to the jobs market, and production of goods ramps back up, some of the factors driving up prices will ease.
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