NMSU economics professor: Don’t wait to shop for the holidays
LAS CRUCES - With the holiday season just around the corner, an economics professor at New Mexico State University said the time to shop for gifts is now.
Christopher Erickson, head of the Department of Economics, Applied Statistics and International Business in NMSU’s College of Business, urged consumers not to delay holiday shopping this year and warned they may face fewer goods and higher prices at stores due to the strained supply chain.
“There’s a shortage of goods on the shelf, so it’s hard to find products. And the products that are there are not going to be put on sale,” Erickson said. “If you’re shopping for Christmas, you want to buy early.”
The culprit responsible for global supply chain disruptions is not the Grinch, Erickson explained, but the 20-month-old pandemic fueled by the relentless virus that causes COVID-19.
The chain reaction caused by COVID-19 continues to tumble, and it has been nearly two years since the virus hit home.
Supply chain disruptions have hit hard in the United States and other major supplying countries that the U.S. relies on for products, including China, Erickson said. The shortage of goods on the shelves, he added, is also causing a second problem: inflation.
“We’ve seen inflation, and that inflation is being driven primarily by the supply chain disruptions in the economy,” he said.
The pandemic has also deeply impacted employment in various industries, according to Erickson. One issue hampering economic recovery in the U.S. is a worker shortage resulting from individuals who lost their jobs early in the pandemic but have yet to seek re-employment.
Nationally, Erickson said, employment remains 3 percent below its peak before the onset of the pandemic. That figure is double in New Mexico, he added.
“That disruption to employment has knock-on effects,” he explained, “because if you don’t have people working in factories, you don’t have goods being produced.”
Erickson cited several reasons for the worker shortages. Individuals with children, for example, are hesitant to rejoin the workforce because of limited child care resources. Others, he said, are staying away from work simply out of concern they’ll become infected with COVID-19.
Low wages could also be a major factor, Erickson said.
“Ultimately, if employers are willing to pay more, they would get more workers,” he said. “One of the issues you have is that labor markets are very slow to adjust. And this has been, and is, what drives the business cycle.”
Erickson said there’s little to no proof that extended unemployment benefits have swayed people from returning to work.
“It sounds like it would be correct, but the evidence just isn’t there,” he said. “A number of states ended their extended unemployment compensation programs early. In those states, compared to other states, there seems to be no real difference in workers returning to their jobs.”
Erickson said the supply chain bottlenecks have the potential to devastate small businesses. Large retailers, like Walmart, have more resources to weather the disruptions, he explained, and are paying premium prices to ensure their products are being transported and unloaded as quickly as possible.
“Historically, it was unheard of for a company like Walmart to lease their own ships for transportation, but now they’re doing it,” Erickson said. “The reason why they’re doing it is because they want to make sure they have products for Christmas. Small retailers can’t do that and are at a competitive disadvantage because of that.”
Erickson said the pandemic’s destructive economic effects may continue until COVID-19 is brought under control. But he expects the kinks in the supply chain to be resolved over the next few months — just not in time for the holidays.
In the meantime, time is running out to purchase gifts for loved ones.
“I will tell you I’ve taken my own advice,” Erickson said. “Between my wife and I, we have seven grandchildren, and we’ve already done our Christmas shopping for them."
If you can’t find what you’re looking for in stores, Erickson suggested shopping online for a greater variety of products.
“There’s always things you can find online that you can’t find locally,” he added, “but that might be truer this Christmas than as typical.”
Tatiana Favela writes for New Mexico State University Marketing and Communications and can be reached at 575-646-3221, firstname.lastname@example.org.