Is it time to short the ‘shortage economy’?

One thing that is not in short supply are stories about shortages.

The BBC leads with “Shortage problem: What’s the UK running low on and why?”, meanwhile The New Yorker has, “The Supply-Chain Mystery: Why, more than a year and a half into the pandemic, do strange shortages keep popping up in so many corners of American life?”, the Nikkei covers the angle in a different way, “Japan’s COVID emergency is over. Labor and chip shortages are not”, and last but not least of this small sample selection, The New York Time goes with “The World Is Still Short of Everything. Get Used to It“. Meanwhile, The Economist and Barron’s magazines both lead with a major feature on shortages.

The title of a leading article in a newspaper, or the front cover of a magazine typically reflect the consensus narrative. They tell us what we already believe to be true. But because we believe them to be true the chances of a reversal in the trend occurring appear very remote, even so ridiculous as to even contemplate the notion.

Magazine front covers especially have a long history of proclaiming erroneous predictions at critical turning points in both economic activity and the markets. Far from being prescient, instead they tend to extrapolate current trends. Two of the most infamous come from The Economist and Business Week.