Pallet Prices at an All-Time High
Pallet prices are through the roof. The below is a graph created by Bloomberg based on data from the U.S. Bureau of Labor Statistics:
The rise in prices is, like so many inputs, driven by out-of-control demand for consumer goods. However, one ray of sunshine is that the cost of lumber has fallen by 40% since its historic May high. That will make producing new pallets cheaper, but it is doubtful that the lower cost will have a near-term impact.
Federal Reserve Chairman Powell Expresses Humility
If you have felt some bewilderment over the long, strange ride we are experiencing with supply and demand; you are not alone. The Federal Reserve Chief, Jerome Powell, feels our pain. According to the Wall Street Journal and other outlets, he closed yesterday’s press conference with these humble words: “It turns out it’s a heck of a lot easier to create demand than it is to, you know, to bring supply back up to snuff.”
Notable Quotes from Federal Reserve Chairman Powell’s Press Conference
Chairman Powell gave a speech and continued with a lengthy question-and-answer session. Here are some outtakes from his press conference that I thought were of note to those of us in the toy industry:
“Today, the Federal Open Market Committee kept interest rates near zero and maintained our asset purchases”
“Real GDP this year appears to be on track to post its fastest rate of increase in decades.”
“Household spending is rising at a rapid pace, boosted by the ongoing reopening of the economy, fiscal support, and accommodative financial conditions.”
“Employment in this sector and the economy as a whole remains well below pre-pandemic levels.”
“Inflation has increased notably in recent months. The 12-month change in PCE prices was 3.6 percent in April and will likely remain elevated in coming months before moderating.”
“Economic projections today forecast 7 percent growth in 2022, unemployment at 4 ½ percent, and core inflation of 3 percent.
“Is there a risk that inflation will remain higher than we thought? Yes. And if we see inflation moving above our goals in a time—sorry—to an extent—to a level or a persistent—or persistently enough, you know, we would be prepared to use our tools to address that.”
If you would like to read the entire transcript, you can do so by clicking here.