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Interestingly, there is an embedded video in that article that explains the issue specific to the automotive shortage - it's because the automotive industry can

Interestingly, there is an embedded video in that article that explains the issue specific to the automotive shortage - it's because the automotive industry cancelled a lot of chip orders in anticipation of low vehicle demand and that caused chip makers to reduce their production for the kinds of chips that go into cars, and now it takes time to ramp back up: https://www.cnbc.com/video/2021/03/02/how-the-global-computer-chip-shortage-happened.html https://www.cnbc.com/video/2021/03/02/how-the-global-compute... It's at the 4m15s part of the video I think a facepalm is in order.

bredren 5y ago
Since 14% of renters are behind on rent and evictions begin June 30, aren’t vehicle repossessions going to kick in July / August? Presumably, due in part to eviction protection, they have been able to divert all or a portion of their rent payments to keeping up with bad car loans for commute vehicles that often will not be needed. These folks need them for housing unfortunately. If repossessed cars start showing up that should put downward pressure on people wanting to buy new ones. Most new cars still suck / Do not offer meaningful new features. And of those who do buy new, that will be another fresh supply of used cars. How long is this chip shortage due to vehicles going to last given these circumstances? https://news.berkeley.edu/2021/05/07/are-renters-and-the-u-s-economy-hurtling-toward-an-eviction-cliff/ https://news.berkeley.edu/2021/05/07/are-renters-and-the-u-s...
- zitterbewegung 5y ago
  The issue is that supply is greatly exceeding demand. It also isn't constrained to Vehicles. Apple's Q2 guidance has said that iPads and Macs supplies have been constrained. [1]. Also, if you get reposessed cars that doesn't mean you will be able to resell them. Sure the automakers made a mistake in their orders for chips but since everyone is now trying to get foundries making chips and we are still having logistic problems with Air and Ocean freight no one really knows the answer to your question. [2] [1] https://www.bloomberg.com/news/articles/2021-04-29/apple-finally-feels-the-global-semiconductor-shortage?sref=wLyKPDtZ https://www.bloomberg.com/news/articles/2021-04-29/apple-fin... [2] https://unctad.org/news/shipping-during-covid-19-why-container-freight-rates-have-surged https://unctad.org/news/shipping-during-covid-19-why-contain...
- ineedasername 5y ago
  Most new cars still suck / Do not offer meaningful new features That really depends on how old your car is. I generally buy instead of lease, and run the car until it starts having regular problems. As a result, my car is 12 years old, and any new one from the last few years is a significant upgrade in terms of features. I don't really want a monthly car payment again, but I'm almost looking forward to when my current car starts having enough problems to make the upgrade worth it.
  - wizzwizz4 5y ago
    If you don't want a monthly car payment, start your “monthly car payment” into a savings account now. You'll end up paying less for your next car if you can maximise the up-front payment.
    - dwighttk 5y ago
      If you don’t want a monthly car payment pay a monthly car payment so later you can have a smaller monthly car payment?
      - jimbob45 5y ago
        I think the idea is that you accrue the interest yourself instead of paying it to someone else.
        ironmagma 5y ago
        The amount of interest accrued in a savings account is pretty wimpy though.
        unclebucknasty 5y ago
        Yeah, but a savings account? Interest rates for savings are abysmal, and auto-loans are themselves frequently near (or at) zero these days, so it's losing advice as-given. Better advice: put the money in the market or other higher-yielding investment, then take a low or no interest loan on the vehicle when the time comes so those investments can continue to grow at the much higher clip. Money's just too cheap to give away your own cash. Obviously, if the interest rate environment changes, this should be re-evaluated.
- itsoktocry 5y ago
  What do you consider "meaningful new features"? What about new cars "sucks"? They are more reliable, safer, quieter, more powerful, more fuel efficient and more full featured than ever.
  - bredren 5y ago
    We are in the iPod Video stage of individual car ownership.
    - Hamuko 5y ago
      Are you saying that the next step will be the best version of individual car ownership?
      - bredren 5y ago
        I sure hope so. I think car culture is bad art. But to defend the analogy, iPod Video was iPod gen 5. Apple did two more generations on that format with the minimum additional feature set. That might take a while. And there will be many a Zune sold in the meantime.
        tricolon 5y ago
        Can you elaborate a bit? I am quite familiar with the various iPods but quite unfamiliar with cars.
        bredren 5y ago
        There are a lot of car enthusiasts here who can explain what makes new cars cool. You'll have to make your own comparison to iPod features from 2005.
    - mywittyname 5y ago
      I disagree. Whether your into sports cars or fuel efficient cars, both categories have meaningfully improved over the past few years. For sports cars, there's a number of 500,600,700hp cars on the market. Corvettes went mid engine (2020), Miatas lost 400lbs of weight(2016), Mustangs/Camaros/Chargers are now 460+HP (2018ish), a VW Golf R will hit 60MPH in 4 seconds with a 2.0L motor, and that's not even getting into Teslas. For economy cars, a Rav4 hybrid gets about as good of fuel economy as a 2014 Prius, while being substantially larger. There are good hybrid offerings from non-Toyota brands, such as KIA. Plug in hybrids are pretty widely available. Even non-hybrids such as the Civic improved substantially in fuel economy in the past few years. In 2016, Civic fuel economy improved about 8% across the lineup. For many auto makers, the transition from early 2010s to late 2010s came with substantial improvements. Not just in measureable metrics either. Transmission performance has improved so much between 2010 and 2020. It's really insane to experience a 2010 6 speed automatic, then compare it to a car with a modern 8,9,10 speed. The difference is night and day for most cars.
- vxNsr 5y ago
  > Since 14% of renters are behind on rent and evictions begin June 30, aren’t vehicle repossessions going to kick in July / August? > Presumably, due in part to eviction protection, they have been able to divert all or a portion of their rent payments to keeping up with bad car loans for commute vehicles that often will not be needed. There are gonna be far fewer evictions and/or mortgage defaults than people think, all those ppl who have been out of work are likely making more money right now than they were at the start of the pandemic just from unemployment, additionally bec they’re unemployed they may qualify for their states’ Medicaid benefits and food stamps, not to mention the free school lunches than many states have turned into a basically tons of raw produce and other various meal-making materials delivered/picked up each week. All those extra benefits mean the raw unemployment dollars go farther compared to a normal income creating an effectively higher $/hr wage than if you just look at the $300-600/wk(+state unemployment). All this distills down to the fact that everyone has been flush with cash the entire time so much so that I know a few people in March 2020 who were behind on rent but due to all the aforementioned benefits were able to pay the rent they owed. Meaning that people having been making rent and/or mortgage for the most part and have probably been living beyond their (normal) means for the last year. If there’s gonna be any sort of correction it’s not coming until mid-2022 at the earliest.
  - syshum 5y ago
    It is going to come sooner than that, people keep talking about inflation "coming soon" I think those people are blind because it is already here. Right now if we just get off with a little stagflation that would be a blessing, unfortunately I think it is going to far far worse. All those people depending on government checks are going to get hit hardest by the combination of inflation and the required austerity measures
    - imtringued 5y ago
      The economy is projected to grow quickly in 2021 though and even 2022 is projected to grow 3.5% which is still higher than trump's 2.5% average. The debt burden may shrink from sheer growth alone.
- TigeriusKirk 5y ago
  That's an interesting theory. Anecdotally, I occasionally pass by a lot where repossessed cars are stored. I've noticed there have considerably fewer cars in their lots of late, with whole sections completely empty. I'd guessed bad car loans just weren't being made with the pandemic, but this theory makes a lot more sense.
  - bredren 5y ago
    I like that you have this small visual indicator of vehicle repossession rates. If someone took sat photos and performed vehicle count on lots like this across the country that would be a quite an interesting set of data frames. If might not matter if a person pays the rent, but people are definitely on the hook with both their lenders and their auto insurance providers. It has also never been easier to recognize a vehicle marked for repo than it is today. Vigilant's (Motarola) DRN and MVTrac are mature, growing while the cost of new LPR equipment continues to go down. When it comes to the repo man, It's never been a worse time to be in violation of a car loan or lease.
- bluedino 5y ago
  >> Since 14% of renters are behind on rent and evictions begin June 30, aren’t vehicle repossessions going to kick in July / August? Americans will pay their car loan before their rent.
  - Nasrudith 5y ago
    You can sleep in your car but you can't drive your house or apartment.
    - Robotbeat 5y ago
      I think about this fact a lot considering the growing anti-car movement on certain parts of Twitter. Huge misconception about the value of cars, especially for people in America who don't live in extremely dense cities. Something which doesn't need much maintenance, like a Honda or Toyota or something, is a lifeline. Fuel is still relatively cheap; modern cars are twice as efficient as similar cars from ~40-50 years ago. Housing has skyrocketed in that time compared to income. But a car is often a pre-requisite for many jobs. And with Uber/Lyft/door-dash, etc, a car can enable you to almost immediately get a modest job in most cities in the country. And it's easy to move to a new city if you have a car, as it functions as your own private room (even if you have to crash on a couch... or sleep in a Walmart parking lot). They also mean you don't need to rely on local 7/11 or delivery services for food. You can go buy in bulk, shop across town. A car gives you optionality and security. Wise or not, we've built our nation around cars, and now cheap used cars with affordable fuel are basically our main safety net.
  - pWFk41mFfie1NOd 5y ago
    Because of the eviction moratorium there are many who just stopped paying rent. And some of those people bought cars they are only able to afford because they aren't paying rent. Even with prioritizing car payments there will be many who fall behind on those if they start paying rent at new places.
- justapassenger 5y ago
  > Most new cars still suck / Do not offer meaningful new features. In terms of bells and whistles? Yeah, not that much. But in terms of safety tech, there has been a huge progress in last 10 years and it’s not slowing down. New cars are not only getting harder to crash, but in case of crash they’re getting better and better at protecting you. Safety is main reason why I update my cars every few years, even tho it’s pretty costly. But so is having my family seriously injured or killed.
  - dehrmann 5y ago
    > Safety is main reason why I update my cars every few years It's probably only only worth it after a redesign (every 6 years, or so), and I'd wait for the second model year in the new generation for them to work out the kinks. That said, the EV of added safety, especially coming from a car generation build before the small overlap frontal crash test was added in 2012, is pretty good.
  - kens 5y ago
    A couple of days ago I was watching a dramatic video showing test collisions of old cars vs modern cars. I was surprised by how much safer a 2016 car was than a 1992 car. Not to mention the 1959 death trap Bel Air. (It's alarming though that 1992 is now the olden days.) https://www.youtube.com/watch?v=TikJC0x65X0 https://www.youtube.com/watch?v=TikJC0x65X0
    - tomschlick 5y ago
      Yeah I remember talking to my grandfather a few years ago and he made a comment about cars being so fragile now. One accident and they crumple costing thousands to fix when "back in the day" it would just be a bent bumper. I explained that in the old days the car was built sturdier and survived but the people had worse odds, now the car is sacrificed to take the brunt of the force. That finally clicked for him as he remembered quite a few friends being in life threatening crashes back then but barely any today.
      - Chris2048 5y ago
- gumby 5y ago
  It’s hard to predict, even if only a couple of months ahead. As the economy picks up a lot of people who had rent relief may have some sort of income, perhaps enough to push them positively over the line. Not all of the renters on relief, obviously, but perhaps enough to chop the number of actual car repossessions significantly. Separately, I suspect that quite a few of the ppl who had rent relief had cars that, let’s just say, wouldn’t be highly sought in he used vehicle market.
  - bredren 5y ago
    > Separately, I suspect that quite a few of the ppl who had rent relief had cars that, let’s just say, wouldn’t be highly sought in he used vehicle market. Perhaps. Vehicles have been pushed in every medium as status symbols. Creative financing options and cheaper insurance have allowed those affected by this to continue to participate. It isn’t just new cars but expensive restoration and customization of old ones. I think this is beginning to fall away, in part because young people do not rely on physical presence to gain and maintain social standing among their peers as much as they used to. So a better phone camera matters more than nicer rims. Selfies in front of a fancy car get less likes than swimming next to a sea tortoise. That said I think groups that have been economically disadvantaged over long periods of time process and integrate culture shifts like this more slowly.
- aerophilic 5y ago
  A somewhat not intuitive fact: Most renters prioritize their car payments over other debts/rent. Without a car they have no income…
  - pjmorris 5y ago
    And you can sleep in a car, if need be.
    - SilasX 5y ago
      "You can sleep in your car, but you can't drive your house."
      - KirillPanov 5y ago
        Speak for yourself, buddy. You haven't seen my house.
  - azernik 5y ago
    And in many states, your car is one of the things that cannot be repossessed in case of bankruptcy.
- vmception 5y ago
  Looking forward to major US regions becoming market-based economies again.
- deleted 5y ago
  [deleted]
banbanbang 5y ago
That’s not true and disinformation being pushed by the real culprits of the chip shortage: crypto miners. It’s pathetic.
neltnerb 5y ago
I get that this is a potential big problem, but I had to stop reading when the dog washing company blamed needing to respin a new board on a chip being out of stock due to this. I'm sorry, but if you aren't buying enough chips to build all the boards you want to build of a revision, this is just what happens, chip shortage or no. Stuff gets obsoleted all the time, it doesn't take a chip shortage. Blaming a black swan shortage instead of your own poor planning for something as commonplace as needing to respin one board to make more new products is embarrassing.
- syshum 5y ago
  Never let a crisis go to waste Companies always piggy back on the current crisis to make changes or blame issues on that crisis that have nothing at all to do with the actual crisis... come to think about it, governments also do this.
  - dahart 5y ago
    > come to think about it, governments also do this This was my thought watching the video in the article. It went on and on about supply shortages, China, and the Biden administration’s talks to prevent shortage as well as Chinese competition, and then near the end of the video, two little details slip by so fast you could miss them: auto makers cancelled their own orders, now they want their place in line back, and the biggest chip maker (TSMC) is in Taiwan, but it’s really close to China, so it still counts. Yes, preventing supply shortages and paying attention to national security are good things. But neither of those would address the specific “shortage” behind this article & video.
  - TeMPOraL 5y ago
    And so do individuals. There's plenty of tragic or difficult moments that come unexpected in one's life, and it's easy to make them cover for unrelated issues, because questioning the explanation would be greatly untactful. A somewhat stereotypical example - a student that excuses their lack of homework and unpreparedness by mentioning their aunt died, even though they weren't really close with their aunt and they learned about the death an hour before the class started - it's an easy way out that nobody will dare question.
samfisher83 5y ago
Its the whole JIT inventories stuff they preach in business school. Toyota actually stocked enough chips to handle something like this.
- fatbird 5y ago
  I'm starting to think historians will look back at our age and say "it was the MBAs who doomed them", much the same way that historians look at China's history and point to an excess of court eunechs as the reason this or that dynasty fell.
  - Nasrudith 5y ago
    The eunechs being blamed was mostly a "polite" fiction as they had no descendants to offend, especially important if the same dynasty is in place. Badmouthing the current emperor's ancestors isn't good for your health.
    - fatbird 5y ago
      A very fair point. It was my impression that the bloating of the court eunech population was considered a sign of imperial decline. If the empire wasn't expanding, advancement was mostly available through court intrigue, and drama was internal to the class that was jockeying for the emperor's favour. In one sense, it's like the bloating of university administrations over the last couple decades in the U.S. as Pell grants unleashed a torrent of money at post-secondary education. The easiest way to soak up the excess was to bloat the bureaucracy trying to spend it.
- beaconstudios 5y ago
  It's funny because systems dynamics have been known in supply chain optimisation for like 4 decades and the research itself is from the 60S. JIT is an obvious case of overoptimising leading to fragility so the fact that its accepted as the ideal is ludicrous.
shitpostbot 5y ago
I'm about 95% sure the constant wave of chip shortage news is actually the U.S. semiconductor industry astroturfing to establish a narrative about their critical role in the economy, with the end goal being favorable governemtent regulations or even direct subsidies. Not that that it isn't true that they are important or anything. But this feels inorganic and the real shortage is just in the limited availability of cutting edge processor nodes. The automakers just kinda misplanned and thats getting spun hard
giardini 5y ago
The shift to JIT ("Just In Time") inventory has proven problematic: "Coronavirus pandemic exposes fatal flaws of the 'just-in-time' economy" https://www.abc.net.au/news/2020-05-02/coronavirus-pandemic-exposes-just-in-time-economy/12206776 https://www.abc.net.au/news/2020-05-02/coronavirus-pandemic-...
- Scoundreller 5y ago
  Nothing wrong with JIT. The mistake was thinking you could dole penalties for late deliveries, but stop purchasing whenever you like without consequences.
christkv 5y ago
They also seem to point the finger towards hoarding by electronics companies in china to prepare for possible future sanctions.
- throwawayboise 5y ago
  It does highlight the problem with having the origins of your supply chains in a potentially unfriendly country.
- trompetenaccoun 5y ago
  Chinese companies produce those chips, that explanation makes little sense. Rather than the companies "hoarding", it may be they're simply not exporting as much to the US and Europe anymore, for political reasons. Any major company in China is under CCP supervision and towing the party line. It's not like it's a free market where private corporations do as they please. Turns out relying on a single region and in that region mainly on a single country for producing most essential goods wasn't such a good idea. Especially when said country is ruled by a rival regime.
  - christkv 5y ago
    https://archive.is/0LTBa https://archive.is/0LTBa from financial times seems to suggest a lot of hoarding is going on. But the shortage has been worsened by hoarding by sanctions-hit Chinese groups, which has made it harder for some companies to secure components for everyday electronics such as washing machines and toasters.
kenniskrag 5y ago
I think it is called bullwhip effect: The bullwhip effect is a distribution channel phenomenon in which demand forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in consumer demand as one moves further up the supply chain. https://en.m.wikipedia.org/wiki/Bullwhip_effect https://en.m.wikipedia.org/wiki/Bullwhip_effect
bluedino 5y ago
Automakers don’t carry much inventory. Issues at any of the suppliers can cause big holdups in production.
stjohnswarts 5y ago
It's all their lean manufacturing concentration. Inventory is anathema to lean manufacturing and should only have a little bit of anything extra on hand. It works well when everything is running smooth, but in a pandemic shit is going to happen and now they have to pay the opportunity cost. Car purchases are fairly elastic and they'll make up for it next year though but the "quarterly" mentality of WallStreet likes to make mountains out of mole hills.
mortdeus 5y ago
I think the reality of the economy is more obvious than any of this. In other words if the economy "stops" in the automotive department, how fucked are we in general?
- mortdeus 5y ago
  Seriously, assuming the economy is just as dependent as any motor is with "cogs and wheels" how dependent are we on our weakest parts?
  - mortdeus 5y ago
    a better question is what can we do to help?
valuearb 5y ago
And auto makers are estimating they won’t be able to ship 1M cars this quarter because of chip shortages, but that’s less than 4% of demand. That’s no crisis. Let’s face it, automakers not only made their own bed here, but as soon as they canceled their orders PC makers swooped in and claimed the released production because PC sales were through the roof. Next year Pc sales aren’t likely to continue at this pace. We are less than 2 years from a semiconductor glut.
- varjag 5y ago
  Nope, 4% of global demand not met is very much a crisis.
  - valuearb 5y ago
    How?
Mauricebranagh 5y ago
Yes - it was obvious that the pandemic had a finite life and the that demand would re bound. Sounds like accountants who know the cost and not the value of things over ruled the production engineering teams who should have accepted the one off cost to stockpile.
nothis 5y ago
That should be the headline, really, lol.
majky538 5y ago
Same for bicycles manufacturers. At the beginning, nobody knew what's gonna be in the future, low orders and then high demand.

bredren 5y ago

Since 14% of renters are behind on rent and evictions begin June 30, aren’t vehicle repossessions going to kick in July / August? Presumably, due in part to eviction protection, they have been able to divert all or a portion of their rent payments to keeping up with bad car loans for commute vehicles that often will not be needed. These folks need them for housing unfortunately. If repossessed cars start showing up that should put downward pressure on people wanting to buy new ones. Most new cars still suck / Do not offer meaningful new features. And of those who do buy new, that will be another fresh supply of used cars. How long is this chip shortage due to vehicles going to last given these circumstances? https://news.berkeley.edu/2021/05/07/are-renters-and-the-u-s-economy-hurtling-toward-an-eviction-cliff/ https://news.berkeley.edu/2021/05/07/are-renters-and-the-u-s...

zitterbewegung 5y ago
The issue is that supply is greatly exceeding demand. It also isn't constrained to Vehicles. Apple's Q2 guidance has said that iPads and Macs supplies have been constrained. [1]. Also, if you get reposessed cars that doesn't mean you will be able to resell them. Sure the automakers made a mistake in their orders for chips but since everyone is now trying to get foundries making chips and we are still having logistic problems with Air and Ocean freight no one really knows the answer to your question. [2] [1] https://www.bloomberg.com/news/articles/2021-04-29/apple-finally-feels-the-global-semiconductor-shortage?sref=wLyKPDtZ https://www.bloomberg.com/news/articles/2021-04-29/apple-fin... [2] https://unctad.org/news/shipping-during-covid-19-why-container-freight-rates-have-surged https://unctad.org/news/shipping-during-covid-19-why-contain...
ineedasername 5y ago
Most new cars still suck / Do not offer meaningful new features That really depends on how old your car is. I generally buy instead of lease, and run the car until it starts having regular problems. As a result, my car is 12 years old, and any new one from the last few years is a significant upgrade in terms of features. I don't really want a monthly car payment again, but I'm almost looking forward to when my current car starts having enough problems to make the upgrade worth it.
- wizzwizz4 5y ago
  If you don't want a monthly car payment, start your “monthly car payment” into a savings account now. You'll end up paying less for your next car if you can maximise the up-front payment.
  - dwighttk 5y ago
    If you don’t want a monthly car payment pay a monthly car payment so later you can have a smaller monthly car payment?
    - jimbob45 5y ago
      I think the idea is that you accrue the interest yourself instead of paying it to someone else.
      - ironmagma 5y ago
        The amount of interest accrued in a savings account is pretty wimpy though.
      - unclebucknasty 5y ago
        Yeah, but a savings account? Interest rates for savings are abysmal, and auto-loans are themselves frequently near (or at) zero these days, so it's losing advice as-given. Better advice: put the money in the market or other higher-yielding investment, then take a low or no interest loan on the vehicle when the time comes so those investments can continue to grow at the much higher clip. Money's just too cheap to give away your own cash. Obviously, if the interest rate environment changes, this should be re-evaluated.
itsoktocry 5y ago
What do you consider "meaningful new features"? What about new cars "sucks"? They are more reliable, safer, quieter, more powerful, more fuel efficient and more full featured than ever.
- bredren 5y ago
  We are in the iPod Video stage of individual car ownership.
  - Hamuko 5y ago
    Are you saying that the next step will be the best version of individual car ownership?
    - bredren 5y ago
      I sure hope so. I think car culture is bad art. But to defend the analogy, iPod Video was iPod gen 5. Apple did two more generations on that format with the minimum additional feature set. That might take a while. And there will be many a Zune sold in the meantime.
      - tricolon 5y ago
        Can you elaborate a bit? I am quite familiar with the various iPods but quite unfamiliar with cars.
        bredren 5y ago
        There are a lot of car enthusiasts here who can explain what makes new cars cool. You'll have to make your own comparison to iPod features from 2005.
  - mywittyname 5y ago
    I disagree. Whether your into sports cars or fuel efficient cars, both categories have meaningfully improved over the past few years. For sports cars, there's a number of 500,600,700hp cars on the market. Corvettes went mid engine (2020), Miatas lost 400lbs of weight(2016), Mustangs/Camaros/Chargers are now 460+HP (2018ish), a VW Golf R will hit 60MPH in 4 seconds with a 2.0L motor, and that's not even getting into Teslas. For economy cars, a Rav4 hybrid gets about as good of fuel economy as a 2014 Prius, while being substantially larger. There are good hybrid offerings from non-Toyota brands, such as KIA. Plug in hybrids are pretty widely available. Even non-hybrids such as the Civic improved substantially in fuel economy in the past few years. In 2016, Civic fuel economy improved about 8% across the lineup. For many auto makers, the transition from early 2010s to late 2010s came with substantial improvements. Not just in measureable metrics either. Transmission performance has improved so much between 2010 and 2020. It's really insane to experience a 2010 6 speed automatic, then compare it to a car with a modern 8,9,10 speed. The difference is night and day for most cars.
vxNsr 5y ago
> Since 14% of renters are behind on rent and evictions begin June 30, aren’t vehicle repossessions going to kick in July / August? > Presumably, due in part to eviction protection, they have been able to divert all or a portion of their rent payments to keeping up with bad car loans for commute vehicles that often will not be needed. There are gonna be far fewer evictions and/or mortgage defaults than people think, all those ppl who have been out of work are likely making more money right now than they were at the start of the pandemic just from unemployment, additionally bec they’re unemployed they may qualify for their states’ Medicaid benefits and food stamps, not to mention the free school lunches than many states have turned into a basically tons of raw produce and other various meal-making materials delivered/picked up each week. All those extra benefits mean the raw unemployment dollars go farther compared to a normal income creating an effectively higher $/hr wage than if you just look at the $300-600/wk(+state unemployment). All this distills down to the fact that everyone has been flush with cash the entire time so much so that I know a few people in March 2020 who were behind on rent but due to all the aforementioned benefits were able to pay the rent they owed. Meaning that people having been making rent and/or mortgage for the most part and have probably been living beyond their (normal) means for the last year. If there’s gonna be any sort of correction it’s not coming until mid-2022 at the earliest.
- syshum 5y ago
  It is going to come sooner than that, people keep talking about inflation "coming soon" I think those people are blind because it is already here. Right now if we just get off with a little stagflation that would be a blessing, unfortunately I think it is going to far far worse. All those people depending on government checks are going to get hit hardest by the combination of inflation and the required austerity measures
  - imtringued 5y ago
    The economy is projected to grow quickly in 2021 though and even 2022 is projected to grow 3.5% which is still higher than trump's 2.5% average. The debt burden may shrink from sheer growth alone.
TigeriusKirk 5y ago
That's an interesting theory. Anecdotally, I occasionally pass by a lot where repossessed cars are stored. I've noticed there have considerably fewer cars in their lots of late, with whole sections completely empty. I'd guessed bad car loans just weren't being made with the pandemic, but this theory makes a lot more sense.
- bredren 5y ago
  I like that you have this small visual indicator of vehicle repossession rates. If someone took sat photos and performed vehicle count on lots like this across the country that would be a quite an interesting set of data frames. If might not matter if a person pays the rent, but people are definitely on the hook with both their lenders and their auto insurance providers. It has also never been easier to recognize a vehicle marked for repo than it is today. Vigilant's (Motarola) DRN and MVTrac are mature, growing while the cost of new LPR equipment continues to go down. When it comes to the repo man, It's never been a worse time to be in violation of a car loan or lease.
bluedino 5y ago
>> Since 14% of renters are behind on rent and evictions begin June 30, aren’t vehicle repossessions going to kick in July / August? Americans will pay their car loan before their rent.
- Nasrudith 5y ago
  You can sleep in your car but you can't drive your house or apartment.
  - Robotbeat 5y ago
    I think about this fact a lot considering the growing anti-car movement on certain parts of Twitter. Huge misconception about the value of cars, especially for people in America who don't live in extremely dense cities. Something which doesn't need much maintenance, like a Honda or Toyota or something, is a lifeline. Fuel is still relatively cheap; modern cars are twice as efficient as similar cars from ~40-50 years ago. Housing has skyrocketed in that time compared to income. But a car is often a pre-requisite for many jobs. And with Uber/Lyft/door-dash, etc, a car can enable you to almost immediately get a modest job in most cities in the country. And it's easy to move to a new city if you have a car, as it functions as your own private room (even if you have to crash on a couch... or sleep in a Walmart parking lot). They also mean you don't need to rely on local 7/11 or delivery services for food. You can go buy in bulk, shop across town. A car gives you optionality and security. Wise or not, we've built our nation around cars, and now cheap used cars with affordable fuel are basically our main safety net.
- pWFk41mFfie1NOd 5y ago
  Because of the eviction moratorium there are many who just stopped paying rent. And some of those people bought cars they are only able to afford because they aren't paying rent. Even with prioritizing car payments there will be many who fall behind on those if they start paying rent at new places.
justapassenger 5y ago
> Most new cars still suck / Do not offer meaningful new features. In terms of bells and whistles? Yeah, not that much. But in terms of safety tech, there has been a huge progress in last 10 years and it’s not slowing down. New cars are not only getting harder to crash, but in case of crash they’re getting better and better at protecting you. Safety is main reason why I update my cars every few years, even tho it’s pretty costly. But so is having my family seriously injured or killed.
- dehrmann 5y ago
  > Safety is main reason why I update my cars every few years It's probably only only worth it after a redesign (every 6 years, or so), and I'd wait for the second model year in the new generation for them to work out the kinks. That said, the EV of added safety, especially coming from a car generation build before the small overlap frontal crash test was added in 2012, is pretty good.
- kens 5y ago
  A couple of days ago I was watching a dramatic video showing test collisions of old cars vs modern cars. I was surprised by how much safer a 2016 car was than a 1992 car. Not to mention the 1959 death trap Bel Air. (It's alarming though that 1992 is now the olden days.) https://www.youtube.com/watch?v=TikJC0x65X0 https://www.youtube.com/watch?v=TikJC0x65X0
  - tomschlick 5y ago
    Yeah I remember talking to my grandfather a few years ago and he made a comment about cars being so fragile now. One accident and they crumple costing thousands to fix when "back in the day" it would just be a bent bumper. I explained that in the old days the car was built sturdier and survived but the people had worse odds, now the car is sacrificed to take the brunt of the force. That finally clicked for him as he remembered quite a few friends being in life threatening crashes back then but barely any today.
    - Chris2048 5y ago
gumby 5y ago
It’s hard to predict, even if only a couple of months ahead. As the economy picks up a lot of people who had rent relief may have some sort of income, perhaps enough to push them positively over the line. Not all of the renters on relief, obviously, but perhaps enough to chop the number of actual car repossessions significantly. Separately, I suspect that quite a few of the ppl who had rent relief had cars that, let’s just say, wouldn’t be highly sought in he used vehicle market.
- bredren 5y ago
  > Separately, I suspect that quite a few of the ppl who had rent relief had cars that, let’s just say, wouldn’t be highly sought in he used vehicle market. Perhaps. Vehicles have been pushed in every medium as status symbols. Creative financing options and cheaper insurance have allowed those affected by this to continue to participate. It isn’t just new cars but expensive restoration and customization of old ones. I think this is beginning to fall away, in part because young people do not rely on physical presence to gain and maintain social standing among their peers as much as they used to. So a better phone camera matters more than nicer rims. Selfies in front of a fancy car get less likes than swimming next to a sea tortoise. That said I think groups that have been economically disadvantaged over long periods of time process and integrate culture shifts like this more slowly.
aerophilic 5y ago
A somewhat not intuitive fact: Most renters prioritize their car payments over other debts/rent. Without a car they have no income…
- pjmorris 5y ago
  And you can sleep in a car, if need be.
  - SilasX 5y ago
    "You can sleep in your car, but you can't drive your house."
    - KirillPanov 5y ago
      Speak for yourself, buddy. You haven't seen my house.
- azernik 5y ago
  And in many states, your car is one of the things that cannot be repossessed in case of bankruptcy.
vmception 5y ago
Looking forward to major US regions becoming market-based economies again.
deleted 5y ago
[deleted]

banbanbang 5y ago

That’s not true and disinformation being pushed by the real culprits of the chip shortage: crypto miners. It’s pathetic.

neltnerb 5y ago

I get that this is a potential big problem, but I had to stop reading when the dog washing company blamed needing to respin a new board on a chip being out of stock due to this. I'm sorry, but if you aren't buying enough chips to build all the boards you want to build of a revision, this is just what happens, chip shortage or no. Stuff gets obsoleted all the time, it doesn't take a chip shortage. Blaming a black swan shortage instead of your own poor planning for something as commonplace as needing to respin one board to make more new products is embarrassing.

syshum 5y ago
Never let a crisis go to waste Companies always piggy back on the current crisis to make changes or blame issues on that crisis that have nothing at all to do with the actual crisis... come to think about it, governments also do this.
- dahart 5y ago
  > come to think about it, governments also do this This was my thought watching the video in the article. It went on and on about supply shortages, China, and the Biden administration’s talks to prevent shortage as well as Chinese competition, and then near the end of the video, two little details slip by so fast you could miss them: auto makers cancelled their own orders, now they want their place in line back, and the biggest chip maker (TSMC) is in Taiwan, but it’s really close to China, so it still counts. Yes, preventing supply shortages and paying attention to national security are good things. But neither of those would address the specific “shortage” behind this article & video.
- TeMPOraL 5y ago
  And so do individuals. There's plenty of tragic or difficult moments that come unexpected in one's life, and it's easy to make them cover for unrelated issues, because questioning the explanation would be greatly untactful. A somewhat stereotypical example - a student that excuses their lack of homework and unpreparedness by mentioning their aunt died, even though they weren't really close with their aunt and they learned about the death an hour before the class started - it's an easy way out that nobody will dare question.

samfisher83 5y ago

Its the whole JIT inventories stuff they preach in business school. Toyota actually stocked enough chips to handle something like this.

fatbird 5y ago
I'm starting to think historians will look back at our age and say "it was the MBAs who doomed them", much the same way that historians look at China's history and point to an excess of court eunechs as the reason this or that dynasty fell.
- Nasrudith 5y ago
  The eunechs being blamed was mostly a "polite" fiction as they had no descendants to offend, especially important if the same dynasty is in place. Badmouthing the current emperor's ancestors isn't good for your health.
  - fatbird 5y ago
    A very fair point. It was my impression that the bloating of the court eunech population was considered a sign of imperial decline. If the empire wasn't expanding, advancement was mostly available through court intrigue, and drama was internal to the class that was jockeying for the emperor's favour. In one sense, it's like the bloating of university administrations over the last couple decades in the U.S. as Pell grants unleashed a torrent of money at post-secondary education. The easiest way to soak up the excess was to bloat the bureaucracy trying to spend it.
beaconstudios 5y ago
It's funny because systems dynamics have been known in supply chain optimisation for like 4 decades and the research itself is from the 60S. JIT is an obvious case of overoptimising leading to fragility so the fact that its accepted as the ideal is ludicrous.

shitpostbot 5y ago

I'm about 95% sure the constant wave of chip shortage news is actually the U.S. semiconductor industry astroturfing to establish a narrative about their critical role in the economy, with the end goal being favorable governemtent regulations or even direct subsidies. Not that that it isn't true that they are important or anything. But this feels inorganic and the real shortage is just in the limited availability of cutting edge processor nodes. The automakers just kinda misplanned and thats getting spun hard

giardini 5y ago

The shift to JIT ("Just In Time") inventory has proven problematic: "Coronavirus pandemic exposes fatal flaws of the 'just-in-time' economy" https://www.abc.net.au/news/2020-05-02/coronavirus-pandemic-exposes-just-in-time-economy/12206776 https://www.abc.net.au/news/2020-05-02/coronavirus-pandemic-...

Scoundreller 5y ago
Nothing wrong with JIT. The mistake was thinking you could dole penalties for late deliveries, but stop purchasing whenever you like without consequences.

christkv 5y ago

They also seem to point the finger towards hoarding by electronics companies in china to prepare for possible future sanctions.

throwawayboise 5y ago
It does highlight the problem with having the origins of your supply chains in a potentially unfriendly country.
trompetenaccoun 5y ago
Chinese companies produce those chips, that explanation makes little sense. Rather than the companies "hoarding", it may be they're simply not exporting as much to the US and Europe anymore, for political reasons. Any major company in China is under CCP supervision and towing the party line. It's not like it's a free market where private corporations do as they please. Turns out relying on a single region and in that region mainly on a single country for producing most essential goods wasn't such a good idea. Especially when said country is ruled by a rival regime.
- christkv 5y ago
  https://archive.is/0LTBa https://archive.is/0LTBa from financial times seems to suggest a lot of hoarding is going on. But the shortage has been worsened by hoarding by sanctions-hit Chinese groups, which has made it harder for some companies to secure components for everyday electronics such as washing machines and toasters.

kenniskrag 5y ago

I think it is called bullwhip effect: The bullwhip effect is a distribution channel phenomenon in which demand forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in consumer demand as one moves further up the supply chain. https://en.m.wikipedia.org/wiki/Bullwhip_effect https://en.m.wikipedia.org/wiki/Bullwhip_effect

bluedino 5y ago

Automakers don’t carry much inventory. Issues at any of the suppliers can cause big holdups in production.

stjohnswarts 5y ago

It's all their lean manufacturing concentration. Inventory is anathema to lean manufacturing and should only have a little bit of anything extra on hand. It works well when everything is running smooth, but in a pandemic shit is going to happen and now they have to pay the opportunity cost. Car purchases are fairly elastic and they'll make up for it next year though but the "quarterly" mentality of WallStreet likes to make mountains out of mole hills.

mortdeus 5y ago

I think the reality of the economy is more obvious than any of this. In other words if the economy "stops" in the automotive department, how fucked are we in general?

mortdeus 5y ago
Seriously, assuming the economy is just as dependent as any motor is with "cogs and wheels" how dependent are we on our weakest parts?
- mortdeus 5y ago
  a better question is what can we do to help?

valuearb 5y ago

And auto makers are estimating they won’t be able to ship 1M cars this quarter because of chip shortages, but that’s less than 4% of demand. That’s no crisis. Let’s face it, automakers not only made their own bed here, but as soon as they canceled their orders PC makers swooped in and claimed the released production because PC sales were through the roof. Next year Pc sales aren’t likely to continue at this pace. We are less than 2 years from a semiconductor glut.

varjag 5y ago
Nope, 4% of global demand not met is very much a crisis.
- valuearb 5y ago
  How?

Mauricebranagh 5y ago

Yes - it was obvious that the pandemic had a finite life and the that demand would re bound. Sounds like accountants who know the cost and not the value of things over ruled the production engineering teams who should have accepted the one off cost to stockpile.

nothis 5y ago

That should be the headline, really, lol.

majky538 5y ago

Same for bicycles manufacturers. At the beginning, nobody knew what's gonna be in the future, low orders and then high demand.