The situation in which employers find it hard to hire and the supply chain crisis forces businesses to hike prices is likely to persist for at least 6 to 12 months, one bank chief said.
“The realities of things like… wage pressures… supply chain pressures… all these things are going to continue to contribute to this wage inflation that we’re seeing,” Wells Fargo CEO and President Charles Scharf told Yahoo Finance’s Andy Serwer at the annual Milken Institute Global Conference.
Noting that supermarkets are already forecasting higher prices, Scharf added that while “that’s all very, very real, … all these things will level out. Supply chains will get solved, I personally just think it’s going to be six-to-12 months.”
Supply chain crisis’ impact on smaller and medium-sized businesses to be monitored
As companies have begun introducing price increases on household products, economists continue to debate whether the inflation that the U.S. economy is experiencing is transitory or not.
One of the factors pushing inflation higher is the supply chain fiasco the country is experiencing, which has been affecting various goods. With many containers stranded at sea and trucking routes clogged, experts anticipate that these problems will iron themselves out.
But they disagree on exactly when those pressures will ease.
Siemens USA CEO Barbara Humpton told Serwer at the Milken conference on Monday that her supply chain professionals are expecting disruptions through 2022.
Others predict an even longer time horizon for supply chain disruptions to abate.
“We expect… strained supply chains to last until the early parts of 2023,” Peter Sand, chief shipping analyst at Copenhagen-based BIMCO, a shipping trade group, told Yahoo Finance in a previous interview. “We are basically seeing a global all-but-breakdown of the supply chains from end-to-end.”
Scharf said at this stage, he was also concerned about the “evenness” of how these problems will impact businesses and whether or not small- and medium-sized businesses would get outmaneuvered by larger businesses.
“When inventory levels get lower, who’s going to get the shipment versus who’s not? Who’s able to spend? Who’s able to pay for the increase in wages?” Scharf explained. “It’s something that we’ve got to watch and continue to figure out how we help them.”
Aarthi is a reporter for Yahoo Finance. She can be reached at firstname.lastname@example.org. Follow her on Twitter @aarthiswami.
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