Computer Chip Crisis Persists; Nancy Pelosi Is Running Again
Author: Greg Valliere
January 26, 2022
JUST AS GRIDLOCK at U.S. ports is likely to persist until later this year, a similar crisis shows no sign of ending in the computer chip industry, which is crippling U.S. automakers. The shortage may persist into 2023.
THIS GRIM NEWS was detailed yesterday by the Commerce Department, which said U.S. manufacturers’ median chip inventory levels have plummeted from about 40 days’ supply before the pandemic to less than five days last fall, according to a Commerce survey of 150 companies worldwide.
THE LACK OF CHIP INVENTORY leaves auto manufacturers and other chip users with “no room for error,” Commerce Secretary Gina Raimondo said yesterday.
“IF A COVID OUTBREAK, a storm, a natural disaster, political instability, problems with equipment — really anything” disrupts a chipmaking facility anywhere in the world, “we will feel the ramifications,” Raimondo said. “A covid outbreak in Malaysia has the potential to shut down a manufacturing facility in America.”
THE COMMERCE DEPARTMENT report gave fresh momentum to efforts to pass a $52 billion package of incentives to U.S. manufacturers. The Senate already has passed the bill, but even if the House acts soon, this legislation — and a $20 billion chip facility planned by Intel in Ohio — probably will not boost supplies until 2024 or later.
THE LACK OF COMPUTER CHIPS has been a major headwind for GDP, as automakers shave production. Raimondo said soaring new and used car prices accounted for a third of overall inflation last year.
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NANCY PELOSI, RUNNING AGAIN: Democrats desperately need an injection of fresh blood, but Nancy Pelosi, 81, announced yesterday that she plans to run again. Pelosi’s re-election to her Nob Hill seat in San Francisco is virtually certain; she has easily won there since 1987.
MANY DEMOCRATS WE’VE TALKED WITH aren’t certain that Pelosi will remain as House Speaker next year. Her announcement simply said she will run for re-election to the House, not to leadership. If Republicans capture the House, which is very likely, she may resign rather than deal with Kevin McCarthy, her probable successor. For now, she can seek re-election and avoid charges that she’s a lame duck.
BUT THE FOCUS QUICKLY SHIFTED YESTERDAY to who might eventually replace her. The frontrunner is Rep. Hakeem Jeffries (D-N.Y.), Chairman of the House Democratic Caucus, who has solid support from centrists and the party’s progressives. Jeffries probably would begin as Minority Leader; still another Democrat, Jim Cooper of Tennessee, announced yesterday that he’s stepping down.
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The big news today will come from Jerome Powell’s press conference; will the extreme stock market volatility prompt him to assure investors that he won’t over-do rate hikes? At the least, a 50 basis point increase in March is now off the table . . .
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