Chip Shortage and the Economic Impact
Will the Chip Shortage cause the next recession? The economy has been booming from the technology sector, jobs are being created, goods are in high demand, low interest rates have things like cars and appliances so cheap to finance they have seen an increase in sales. Everything from cell phones to Automobiles will be affected. When these products production is halted, that also slows down the shipping industry and other areas. This could be a downward spiral. Car dealerships, especially the one I work at are sitting on only about 1/3rd of their normal inventory with no signs of this picking up. This is driving up the price on used vehicles, making transportation harder for people to acquire. Electronic components to repair vehicles are going on back logs. Also taking vehicles from loaner and rental fleets to sell, making it harder for people who have their vehicle in the shop waiting on parts to have transportation.
In 2020 we see an article about how much electronic manufacturing supports the U.S. economy.
Bannockburn, Ill., USA, May 13, 2020 (GLOBE NEWSWIRE) -- BANNOCKBURN, Ill., USA, May 13, 2020 -- Electronics manufacturing contributes powerfully to the U.S. economy, according to a new report released by IPC, the global electronics manufacturing industry association. The report finds the electronics manufacturing sector directly supports more than 1.3 million U.S. jobs. For every U.S. electronics manufacturing job, three other jobs are supported in the U.S. economy, contributing to a total of 5.3 million American jobs. Also, the industry indirectly and directly contributes $714 billion (3.7 percent) to U.S. GDP.
“Electronics are at the heart of thousands of products and hundreds of industries in the U.S.,” said John Mitchell, president and CEO of IPC. “More than most industries, we are vertically and horizontally integrated across many markets, and the health of our industry is key to the overall success of the U.S. economy.”
This will impact everything electronic and beyond. This means higher prices, less sales, less shiping, and overall an economic slowdown. What can you do to position yourself for this? This all depends on your situation. I would recommend starting to prepare though. If you have money automatically being invested in electronics I would start thinking where to move it. These companies are going to see a slowdown. Personally, I am scaling back my investments into PRGTX, PRDGX and increasing it in PRHSX, also possibly adding some yield paying funds or dividend Eft's.
Sharing is caring