On July 28, the U.S. Federal Reserve announced that it would maintain a target range of 0 to 0.25% for the federal funds rate, continue to increase its holdings of U.S. Treasuries at a rate of at least $80 billion per month, and purchase MBS (institutional mortgage-backed securities) at a rate of at least $40 billion per month.
Under the dual effects of the global economic recovery and the continued loose monetary policy in the United States, the Bloomberg Commodity Spot Index has reached new highs, and the inflationary pressure it brings has been transmitted to the consumer side. Fed Chairman Jerome Powell noted that the economic reopening process is pushing up inflationary pressures, and if there are signs that long-term inflation expectations are "substantially and consistently" above target levels, the Fed will adjust its policy.
Deng Long, president of the American Chinese Chamber of Commerce, told the client that the speeches of the Fed and related officials can become a bellwether for investment and operation. In the 30 years of business in the United States, Deng Long, as the president of the Chamber of Commerce, has always been very concerned about the macroeconomic policy of the United States, "Now, we obviously feel that prices have soared. This is the first time in 30 years since I've been in the U.S. that I've seen such a massive increase. ”
Container prices doubled 10 times
Lin Xu, secretary general of the Chinese Chamber of Commerce in the United States, said: "The so-called quantitative easing, in the eyes of our people, is that money is not worth it in our hands. The Fed's quantitative easing measures will further exacerbate inflation in American society. ”
Among Chinese businessmen engaged in various industries, enterprises focusing on international trade are greatly affected by inflation.
Deng Long started by operating a chain of supermarkets, and now its subsidiaries have covered many industries such as food and technology. He pointed out that the current soaring prices in the United States are also related to the previous Sino-US trade frictions. Taking wire, copper wire and other products as an example, there are also related production lines in the United States, but after the outbreak of the epidemic, many manufacturers stopped production. Products imported from China need to report tariffs, "so many businessmen do not dare to buy goods, waiting for trade frictions to stop and prices to be adjusted." This leads to the out-of-stock of these products in the market, and as soon as the goods are small, the price rises, and the price is one price a day on the market. ”
Deng Long revealed that the price of ordinary containers has increased by 10 times. "Before the epidemic, more than $2,000 could pay for a container, and now it costs $20,000, and you can't grab a position." The biggest impact on freight rate increases is lower-priced goods. For example, Deng Long said that for cheap foods such as rice noodles and pasta, the price of a container of goods only needs about 20,000 US dollars, which is equivalent to the freight price and the price of the goods. Coupled with tariffs, the cost is higher. "All raw materials are all rising in price, so the price of goods is unstoppable."
Lin Ganhua, president of the Southern California Chinese Community Alliance, runs a cooking oil company in Los Angeles, specializing in products such as soybean oil, corn oil and olive oil. She said that before the outbreak of the epidemic, the price of raw materials such as soybeans in the United States was very cheap, but now the cost has risen sharply, and the ex-factory price of soybean oil has more than tripled. In addition, the cost of maritime transportation has also risen dramatically, price competitiveness has been weakened, and the company's export business has been hit hard. "Originally, our products were sold to Asian countries such as China and Japan. But because shipping is too expensive, now we have temporarily cut off the export business and focused on the US market. ”
With raw materials and transportation costs soaring, the inflation outlook has attracted much attention from U.S. businessmen, who have had to follow the pace of inflation with rising prices.
Lin Guang, president of the Zhejiang Chamber of Commerce in the United States, which mainly produces and sells lighters, said that the current inflation phenomenon is very obvious, especially for the rise in prices. Lin Guang revealed that as an importer, his company's sales rose against the trend during the epidemic due to the sale of daily necessities. However, the results of rising costs are passed on to consumers. The owner of the downstream supermarket told him that after the tariff increase of international trade, the average retail price of related products in the supermarket increased by 30% to 40%, and the prices of thousands of thousands of goods in supermarkets generally increased.
Lin Xu, who has lived in Southern California for many years, said that the price of Zhenjiang aged vinegar can be seen in the price increase: "When Zhenjiang aged vinegar was first imported into the United States, it was 99 cents a bottle; now it is more than 2 US dollars. Chinese businessmen also understand that loss-making business cannot be done, only the price can be raised, so the final increase (cost) is transferred to the people. ”
"I don't want to go to work with unemployment benefits"
On July 21, the IRS and the U.S. Treasury Department announced that more than 2.2 million additional economic impact grants had been issued over the past six weeks. Since March 12, 2021, the IRS has issued grants totaling more than $400 billion.
A number of Chinese businessmen told the client that for operators in the United States, blue-collar recruitment has become a problem, and the "difficulty in recruiting people" is directly related to the issuance of subsidies. For low-income people, unemployed people can receive more benefits at home than they can get when they go to work, so many people choose to stay unemployed.
Lin Ganhua said that the reduction in the number of workers has also led to a decline in the output of various types of oil products in his company. Lin Xu mentioned that now, even large companies such as Amazon and McDonald's are difficult to recruit new employees at the grassroots level. "In order to promote recruitment, if a new employee can be introduced, an additional bonus will be paid to the introducer."
Deng Long revealed that from the employment of its supermarkets, we can also get a glimpse of the structural problems brought to employment by the "big release" policy of quantitative easing in the United States. On the one hand, as a business operator, no one can be invited; on the other hand, the employment cost of the enterprise is also significantly increased. Deng Long explained, "Under inflation, everyone feels that 'money is not worth it'. So, if the wages that enterprises pay to workers are low, they don't do it at all. ”
Currently, the federal minimum hourly wage is $7.25, 12 years have passed since the last federal minimum hourly wage increase. On July 2, the U.S. Department of Labor reported that the average hourly wage of U.S. employees has increased by 3.6 percent over the past 12 months, faster than before the outbreak.
Lin Ganhua said that although the operating costs such as labor costs remain high, the most important thing for her is to maintain the company's normal production and operation activities. "Every morning, our old guests and new guests park their cars in front of our factory and wait for the cooking oil to leave the factory, so we must ensure the supply of products and let the wheel roll down." (Zhongxin Jingwei APP)
Zhongxin Jingwei copyright, without written authorization, any unit and individual shall not reprint, excerpt and use in other ways.