This Week's State Of The Economy - What Is Ahead? - 04 June 2021

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Jun 08, 2021

This Week's State Of The Economy - What Is Ahead? - 04 June 2021

U.S. Review Short on Supplies

 The CDC's relaxation of its mask mandate occurred mid-May, and as data for that month begins rolling in this week, it is evident there is no lack of demand. Supplies, on the other hand, are a worsening problem. Napoleon famously observed that an army marches on its stomach; in a similar vein, an economy can grow only as fast as its supply chains. The message from this week's economic data is that it is not enough to overcome a pandemic and provide federal relief to households and businesses for the past 15 months, the global flow of raw materials and input components needs to be restored in order for this or any modern economy to run at full steam. 

This was evident in the ISM manufacturing survey that kicked off the data flow at the start of this holiday-shortened week. This bellwether of industrial activity exceeded consensus expectations coming in at 61.2 in May, half a point higher than the prior month. The subcomponents moved in both directions. The story that emerges is one of a manufacturing sector that could be growing much faster were it not for supply-side growing pains.




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