The Federal Reserve met last Wednesday, Jan. 26, holding interest rates near zero but reiterating its intentions to raise them later this year in an effort to quell record inflation. One factor contributing to the surging inflation levels continues to be global supply chain issues — a problem that the Fed does not have a significant amount of influence over and one that may extend well into 2022.
According to Cetera Investment Management CIO Gene Goldman, however, the easing of supply-chain woes can be expected to come around summertime.
“Our belief is that supply-chain issues will be alleviated to an extent later this summer,” Goldman told Yahoo Finance Live. “Part of it is [because consumers are pivoting] from goods purchases to services like travel, flying — all the fun things we haven’t done in a while.”
Goldman joined Yahoo Finance Live to discuss the most recent Fed meeting and policy statement. Cetera Investment Management LLC is an SEC-registered investment adviser owned by Cetera Financial Group based in El Segundo, Calif.
Indeed, the global supply-chain crunch has been showing signs of easing since the beginning of January. According to Barrons, container shipping costs from China to the U.S. West Coast have fallen around 30% from autumn 2021 peaks, and the number of containers sitting idly at the Port of Los Angeles is down 40% since early November.
‘Growth is slowing, but nowhere near pre-pandemic levels’
These indicators still remain preliminary, however, and the outlook differs by country and industry sector. The threat of lockdowns and stricter government mandates pertaining to the pandemic may present an obstacle to further supply chain easing. Canada, for instance, is facing empty shelves in grocery stores across the country due to new regulations requiring American truckers to be vaccinated against COVID-19 in order to cross the border.
According to Goldman, action on the part of the Fed in the coming months may impact supply chains through an overall slowdown in consumption and commerce.
“The Fed is trying to tackle this inflation via supply chain issues,” he said. “We just believe that, yes, raising rates will help it to an extent, but just [in the form of] a slowdown in terms of the economy. And this goes into our first theme: economy. The growth is slowing, but nowhere near pre-pandemic levels.”
Looking abroad, Goldman also pointed to Chinese consumer behavior as presenting an opportunity for the supply chain crunch to be alleviated, with Chinese New Year on Feb. 1 fast approaching.
“Historically speaking, their purchases of goods start to slow down right after that time period,” he said. “So this is good news because then Chinese companies can help manufacture and help to open our supply chains. And if you look at the data, we’re seeing improvements there.”
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV
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