3 minute readA [Here] we highlight how rising prices of imported intermediate inputs, like industrial supplies, can have amplified effects through the U.S. economy by increasing the production cost of goods that rely heavily on these inputs. Breaking Down Import Prices by Industry The industrial supplies and materials category comprises intermediate inputs used along the supply chain: paper and paper base stocks; agricultural products and textile supplies; building materials; and unfinished metals, finished metals, and nonmetals for durable goods. The largest price increases within this category have been in unfinished metals for durable goods. Import prices of other end-use categories were far less volatile, with consumer goods prices just 1 percent higher. These impacts, in this framing, sound abstract. But in each of these commodities, and sectors, and economic chains of raw material, labor, capital, and time there are real people’s livelihoods, their workmates, their hours of effort, their anxieties and joy. In depersonalized constructs, price inflation can act as a cudgel, a pencil sharpener, a reduction in force, a missed guidance, and rant on who’s at fault and who should be doing more to stop it. Whether it’s resins or semiconductors or container ships or semi-trailers, or whether it’s truck-drivers, loading-dock workers, installers, retail-counter clerks, or drywallers, the consequence of the delta between “just get it done” and “how do we pay for this” is playing out on the business equivalent of the kitchen table. And it’s playing out on households’ kitchen tables as well. How far off, in timing, was Fed Chairman Bernanke’s assertion of “green shoots?” How far off is Treasury Secretary Yellen in the expected “level-off” in inflationary pressure and volatility and their impacts? That matters, but it matters less than what’s being resolved, and worried about, and imagined, and dreamed at and around America’s actual street-address level kitchen tables. The single-most significant mitigating business factor in one of the wildest two-year rides for modern homebuilding and development has been the capacity, choice, and determination of people at kitchen tables to invest their financial present and future in the unique utility value of new homes, and absorb the monthly payment increases to do that. As builders build their 2022 budgets, rising producer prices and land prices and regulatory costs, and other fees will figure into their forecasts. One can only hope they can also stay in touch with people at their kitchen tables. Poet Joy Harjo writes: At this table we sing with joy, with sorrow. We pray of suffering and remorse. We give thanks. Perhaps the world will end at the kitchen table, while we are laughing and crying, eating of the last sweet bite. Never lose touch with that.
Import prices of industrial supplies and materials have been highly volatile in the recent period, as shown in the chart below, where we divide imported products by their end-use categories. The import price of industrial supplies (red) fell 4 percent with the COVID-19 shutdowns, and was 28 percent higher in July 2021 than its pre-COVID level.Join the conversation
The Kitchen Table Lens: Builders’ Pricing Strategies For 2022
November 10, 2021, 4:33pm
![Imported Prices of Industrial Supplies Have Shot Up in Recent Months: Source: Liberty Street Economics, Federal Reserve Bank of New York [Here] we highlight how rising prices of imported intermediate inputs, like industrial supplies, can have amplified effects through the U.S. economy by increasing the production cost of goods that rely heavily on these inputs. Breaking Down Import Prices by IndustryImport prices of industrial supplies and materials have been highly volatile in the recent period, as shown in the chart below, where we divide imported products by their end-use categories. The import price of industrial supplies (red) fell 4 percent with the COVID-19 shutdowns, and was 28 percent higher in July 2021 than its pre-COVID level. The industrial supplies and materials category comprises intermediate inputs used along the supply chain: paper and paper base stocks; agricultural products and textile supplies; building materials; and unfinished metals, finished metals, and nonmetals for durable goods. The largest price increases within this category have been in unfinished metals for durable goods. Import prices of other end-use categories were far less volatile, with consumer goods prices just 1 percent higher. These impacts, in this framing, sound abstract. But in each of these commodities, and sectors, and economic chains of raw material, labor, capital, and time there are real people’s livelihoods, their workmates, their hours of effort, their anxieties and joy. In depersonalized constructs, price inflation can act as a cudgel, a pencil sharpener, a reduction in force, a missed guidance, and rant on who’s at fault and who should be doing more to stop it. Whether it’s resins or semiconductors or container ships or semi-trailers, or whether it’s truck-drivers, loading-dock workers, installers, retail-counter clerks, or drywallers, the consequence of the delta between “just get it done” and “how do we pay for this” is playing out on the business equivalent of the kitchen table. And it’s playing out on households’ kitchen tables as well. How far off, in timing, was Fed Chairman Bernanke’s assertion of “green shoots?” How far off is Treasury Secretary Yellen in the expected “level-off” in inflationary pressure and volatility and their impacts? That matters, but it matters less than what’s being resolved, and worried about, and imagined, and dreamed at and around America’s actual street-address level kitchen tables. The single-most significant mitigating business factor in one of the wildest two-year rides for modern homebuilding and development has been the capacity, choice, and determination of people at kitchen tables to invest their financial present and future in the unique utility value of new homes, and absorb the monthly payment increases to do that. As builders build their 2022 budgets, rising producer prices and land prices and regulatory costs, and other fees will figure into their forecasts. One can only hope they can also stay in touch with people at their kitchen tables. Poet Joy Harjo writes: At this table we sing with joy, with sorrow. We pray of suffering and remorse. We give thanks. Perhaps the world will end at the kitchen table, while we are laughing and crying, eating of the last sweet bite. Never lose touch with that. Join the conversation](https://develop.housingwire.com/wp-content/uploads/2021/11/image-5.png 768w){kind=link}