LAS CRUCES, New Mexico (KTSM) – With the holidays quickly approaching, an economic professor from New Mexico State University urges that the time to shop for gifts is now.
Christopher Erickson, head of the Department of Economics, Applied Statistics, and International Business at NMSU, urged consumers to not wait on holiday shopping this year and warns customers may face fewer goods at higher prices at stores due to a strained supply chain.
“There’s a shortage of goods on the shelf, so it’s hard to find products. And the products that are there are not going to be put on sale. If you’re shopping for Christmas, you want to buy early.”Christopher Erickson, NMSU economics professor
Erickson said the pandemic is fueling global supply chain disruptions.
Supply chain disruptions have hit hard in the United States and other major supplying countries that the U.S. relies on for products, including China, Erickson said. The shortage of goods on the shelves, he added, is also causing a second problem: inflation.
“We’ve seen inflation, and that inflation is being driven primarily by the supply chain disruptions in the economy,” Erickson said.
The pandemic has also deeply impacted employment in various industries, according to Erickson. One issue hampering economic recovery in the U.S. is a worker shortage resulting from individuals who lost their jobs early in the pandemic but have yet to seek re-employment.
Nationally, employment remains 3 percent below its peak before the onset of the pandemic, according to Erickson. That figure is double in New Mexico, he added.
“That disruption to employment has knock-on effects,” Erickson explained, “because if you don’t have people working in factories, you don’t have goods being produced.”Christoper Erickson, NMSU economics professor
Erickson cited several reasons for the worker shortages. Individuals with children, for example, are hesitant to rejoin the workforce due to limited child care resources. Others, Erickson said, are staying away from work simply out of concern they’ll contract COVID-19.
Low wages could also be a major factor, Erickson said.
“Ultimately, if employers are willing to pay more, they would get more workers,” Erickson said. “One of the issues you have is that labor markets are very slow to adjust. And this has been, and is, what drives the business cycle.”
Erickson said there’s little to no proof that extended unemployment benefits have swayed people from returning to work.
“It sounds like it would be correct, but the evidence just isn’t there,” Erickson said. “A number of states ended their extended unemployment compensation programs early. In those states, compared to other states, there seems to be no real difference in workers returning to their jobs.”
Erickson said the supply chain bottlenecks have the potential to devastate small businesses. Large retailers, such as Walmart, have more resources to weather the disruptions, Erickson explained, and are paying premium prices to ensure their products are being transported and unloaded as quickly as possible.
“Historically, it was unheard of for a company like Walmart to lease their own ships for transportation, but now they’re doing it. The reason why they’re doing it is because they want to make sure they have products for Christmas. Small retailers can’t do that and are at a competitive disadvantage because of that.”Christoper Erickson, NMSU economics professor
Erickson said the pandemic’s destructive economic effects may continue until COVID-19 is brought under control, but expects the kinks in the supply chain to be resolved over the next few months, just not in time for the holidays.
“I will tell you I’ve taken my own advice,” Erickson said. “Between my wife and I, we have seven grandchildren, and we’ve already done our Christmas shopping for them.”
Erickson suggests shopping online for a greater variety of products as opposed to shopping in-store.
“There’s always things you can find online that you can’t find locally, but that might be truer this Christmas than as typical.”Christopher Erickson, NMSU economics professor