Semiconductor shortages are affecting consumers' ability to buy cars, smartphones, and virtually all electronic devices – and there may be little relief in sight.
According to economist John Rutledge, the Covid-19 pandemic will continue to hurt the global supply chain and contribute to the semi-congestion by 2023.
“The nature of epidemics is that they don't have just one wave of infections. You have many waves of infection, "Safanad's chief investment strategist told CNBC's" Trading Nation "on Thursday.
Rutledge, who played a major role in President Ronald Reagan's economic plan, warns that Covid variants will continue to close ports. It happened last month in the Chinese port of Ningbo-Zhoushan, the third largest in the world.
"That's because of a small number of infections that developed there," Rutledge said. "Seafarers in the whole world have not been vaccinated. So some port, somewhere, will close again and it will hit half ships, but other things too."
He notes that the closings, along with the lack of supplies and materials, are having far-reaching global implications.
"Most of the time, you produce more slowly and that hits GDP," said Rutledge, a CNBC employee. "If you don't get the materials you need, you have to slow production."
Rutledge also cites labor shortages as the main reason supply chain problems will persist.
"It's not clear how many of these workers are afraid to go to work, don't want to go to work, or have lots of money," he said. "But it's pretty clear to me that this labor shortage isn't going to go away in three months or six months or 12 months."
Rutledge attributes half of inflation to problems in the supply chain. But what harms production could be bullish for the market and the medium to longer term forecast for economic recovery.
"The growth will be net positive, like the first loss figure we saw," said Rutledge. "The global recovery is advancing. It is running in waves."
Disclosure: John Rutledge owns stocks of Applied Materials, Taiwan Semiconductor, Nvidia, and the iShares Semiconductor ETF.
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