America Is About to Experience the ‘Bullwhip Effect’
By Kim Iskyan

The U.S. economy is about to get the “Indiana Jones treatment.”

He’s the iconic archaeologist/adventurer from the four Steven Spielberg films of the same name. Indiana Jones, played by Harrison Ford, evades Nazis, saves the world, gets the girl… and wields a mean bullwhip.

That’s a single-tailed whip made of braided strips of leather (or – if you’re not the epitome of Indiana Jones cool – nylon) usually used to control livestock… or, in Indiana’s case, to ward off a ferocious lion and then swing across a chasm in the earth.

And as I’ll explain… the American economy is about to experience the economic equivalent of the crack of Indiana Jones’ favored weapon, in what’s called the “bullwhip effect.”

What this means is that we’re going to soon see post-Christmas sales that will make Black Friday and Cyber Monday look like high-priced sidewalk sales by comparison… and, secondly, all this talk about inflation – just now the highest since 1982 – fade like snow on a 70-degree day.

First, though… let’s talk about demand, supply, and where they do – and don’t – meet.

Demand on Steroids

After COVID-19 lockdowns, and with pandemic-related stimulus cash magically deposited into bank accounts, millions of Americans moved into “treat yourself” mode. And the surge in working remotely – the percentage of Americans working from home nearly doubled due to the pandemic – drove up demand for computers and other home-related creature comforts.

That meant that demand for consumer goods – the kind of things made (mostly) in Asia and shipped across the globe – boomed. Overall consumer spending in the U.S. rose 12% in the second quarter of the year (though it cooled off in the third quarter).

All that buying of PlayStations, lumber, Honda CR-Vs, LG InstaView fridges, five-piece bamboo garden sets, etc., has helped drive a sharp economic recovery. In the second quarter of the year, U.S. GDP rose at an annualized rate of 6.7%. And it’s on track to post the strongest full-year growth since 1984.

But as you know – if you’ve tried to buy any of that stuff in recent months – there’s been a shortage of pretty much everything. That’s partly a function of demand on steroids… But it’s also been a supply problem.