When Joe Biden took to the microphones in October to announce, “a series of public and private commitments to move more goods faster, and strengthen the resiliency of our supply chains, by moving towards 24/7 operations at the Ports of Los Angeles and Long Beach,” the supply chain objective was to increase the productivity of the ports.  However, data released for November [SEE HERE] and now December, show exactly the opposite.

Transportation Secretary Pete Buttigieg visited both ports recently.  Both ports, along with Oakland, also made the arriving ships remain further offshore than when the October announcement was made.  They are hiding the ships.

For some unknown reason the Port of Los Angeles (POLA) has delayed reporting of December; but the Port of Long Beach (POLB) just released their data {LINK}.  What the statistics show is that less cargo is being handled now, than it was when the 24/7 port operations announcement was made:

The purpose of telling the ships to await their port time in a queue farther offshore is transparent.  The Biden administration wants to give the illusion they eliminated the bottleneck of container ships.   Out of sight is out of mind.

Operation ‘Hide the Ships’ allows the administration to make claims about port efficiencies and increased productivity that are abjectly false.  The data from the two months after the announcement shows less container offloading and onloading happened in November and December than happened in the prior month of October when the new initiatives were announced.

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History may not always repeat, but it rhymes.   As seen in just about every situation where socialism and government intervention in the market economy of any nation is triggered, eventually you get to the point where government solutions to their created crisis take center stage.

We have seen this exact scenario repeated in the former Soviet Union, Poland, Europe, Cuba and more recently Venezuela.  The triggers are the same, and the outcomes are identical. Now, as unbelievable as it may seem, Joe Biden’s socialist policies have triggered the discussion in the United States.

CTH warned this was going to become a narrative; and we saw the first signs of it at the White House podium on January 12th.

WASHINGTON – People are paying a lot more for food, gas, cars and services, and inflation isn’t over yet as the pandemic continues to distort the economy. So, should governments consider setting the price of essential goods?

It’s been done before, typically during times of crisis, but for most mainstream economists, the answer to this question is a resounding “no.” Limiting how much companies can charge will distort markets, they argue, causing shortages and exacerbating supply chain problems while only temporarily reducing inflation.

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(h/t No9 Coal) This is specifically the #1 precursor, for all the reasons previously mentioned.

Do not be alarmed; be prudent.

What are you seeing in your area?

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This is crazy.  The Canadian government is saying someone made a mistake when they announced they were rescinding the vaccine mandate for cross border commercial truck drivers.  As of right NOW, the January 15th deadline is in place.  All truck drivers from the U.S. or Canada will have to prove their vaccinated status in order to cross the border.

CANADA – The federal government says that unvaccinated Canadian truckers will not be exempted from the new federal vaccine mandate for truck drivers coming into effect this weekend.

In a joint statement, Canada’s transportation, health, and public safety ministers said that Canada’s initial policy requiring truckers coming into Canada to be fully vaccinated, or face PCR testing and quarantine requirements, stands.

Despite the Canada Border Services Agency telling reporters on Wednesday that unvaccinated Canadian truck drivers arriving at the border would “remain exempt” from any testing or quarantine requirements, the government now says that information, provided by a spokesperson, was incorrect.

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The axiom of “the law of unintended consequences” has never been more appropriate than right now.  In the background, as you are reading, there is a looming storm that is going to soon surface in the food supply chain, and the regional vaccine passports are going to make things worse.

To understand what is happening, it becomes necessary to give a more specific background on how the things work inside the supply chain that has been disrupted by government intervention.  This is complex, but I hope to make it understandable for the average person.

How do we avoid supply chain chaos?   My response seems counterintuitive to those who do not understand this unique issue.

Effective immediately, or at least as soon as possible, every venue that can provide food on a commercial basis must be removed from all COVID regulations, including vaccine passports.

Restaurants, school lunchrooms, cafeterias, industrial kitchens, hotels, bars, food trucks and every possible venue for the delivery of freshly cooked meals must immediately be reactivated, and all terms and conditions for visiting those venues, like “vaccine passports”, must be cancelled quickly.

If they are not, and worse, if the restrictions expand beyond current status, there is going to be a worsening retail food crisis as the total food supply chain begins to collapse even further.

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Unfortunately, the upward trend is continuing unabated.  The “producer price index” is essentially the tracking of wholesale prices at three stages: Origination (commodity), Intermediate (processing), and then Final (to wholesale).  Today, the Bureau of Labor and Statistics (BLS) released December price data [Available Here] showing a dramatic 9.7% increase year-over-year in Final Demand products at the wholesale level.

I’m not going to beat this dead horse {Go Deep Here}, except to point out a few even larger warning signs that are evident.    Suffice to say, despite the spin likely from defenders of the White House occupant, the inflation impact is continuing exactly as we would expect.

The monthly price increase was 0.2% which would under normal circumstances give the impression that price pressure for the month was lower than previous.  However, there’s a key component clouding the problem.

As noted by the BLS, “A major factor in the December decrease in prices for final demand goods was the index for gasoline, which moved down 6.1 percent.” Gas prices momentarily dropped in the December capture of pricing; this has skewed the data considerably.  As a consequence, the energy costs measured in December looked like they dropped 3.3 percent.

You are well aware that gasoline has jumped back up in price in the past few weeks.  Additionally, total energy costs to you have not dropped at all.  In the background of this momentary skew, the costs of final demand goods after the energy impact rose .04% in December.

The momentary drop in gasoline and diesel fuel in December gives an artificial outcome in the data for all three stages.   Oil prices are back on the climb, and the prices of the goods and services overall to consumers have not reflected any decrease; factually they have increased even more.

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Earlier today, the White House pushed the Director of the National Economic Council, Brian Deese, to the podium to defend the administration from the outcomes of their economic policies.   Consider this presser the pre-quake tremors.

Mr. Deese begins his presentation by saying giving American workers back their jobs, after shutting down their workplaces and locking out their ability to work at their job, is the equivalent of creating new jobs; the administration is very proud of their magnanimity. Mr. Deese then moves on to the inflation data from today and celebrates a “decrease in the rate of price increases.”  Yes, he used those exact words.

Deese then goes on to say [01:59] that despite the claimed 7% inflation, prices at the grocery store are not higher, gas prices have dropped, home heating costs and natural gas costs are lower, and things are going swimmingly.   I’m not joking about any of that, just watch the first four minutes:

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There was really bad news following the White House celebrating their current economic success. Brian Deese stated the White House intends to use the federal government to get involved in supply chains (distribution), pricing (federal price controls), availability (distribution of products under newly claimed emergency federal authority power via the “pandemic”) and providing relief (protecting urban areas).

What Deese is saying there [4:00 – 09:00] is the worst thing we could ever want to hear when there are massive price increases and simultaneous shortages.  The federal government is ‘leaning forward’, and is going to get more involved.

Then at 09:00 of the video, the alarm bells start ringing.  Journalists asking Brian Deese what the White House is planning to do to get involved and provide national food security.  “The shelves are too empty, and the food is too expensive. What is the White House going to do?”

Whiskey – Tango – Foxtrot!   Danger Will Robinson, DANGER!!

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The absence of food will change things….. Quickly.

The issues will fluctuate region by region and chain by chain as we enter the destabilization phase.  In this phase the impacts in some operators will be small, and in others will be more noticeable.  The difference will be the overall operational excellence in the proprietary business system they operate.

However, once the internal merit is exhausted, the manufacturing issues will impact all food retailers regardless of their warehouse and distribution excellence, or lack thereof.  Ironically, small independent stores might be in the best position to withstand fresh supply pressure as they are closer to the field.

The further away the retail business operation is from the farmer, the greater the impact.  The more people, systems and bureaucracy there are between the retailer and the farmer, the greater the operational impact.  The longer the supply chain, the greater the impact.  It is an unusual dynamic, but the local farmers’ markets are going to be the best source of consistent local supply.  That reality is why the urban areas are going to be hit the hardest.

In this media report from Philadelphia, the local NBC affiliate blames the food supply issues exclusively on Omicron.

This claim is patently false [SEE HERE].

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The final straw, to collapse the remaining supply, will likely be the cross-border truck driver vaccine mandate which kicks in on January 15th.

After that, things start to get sketchy.

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The Bureau of Labor Statistics (BLS) released the December inflation data today [DATA HERE] for December.  Readers on these pages are not surprised to discover that inflation in the U.S. economy has now reached a forty year high at 7 percent.  {Go Deep}

Unfortunately, the 7% in June of 1982 was when inflation was on the way down from Jimmy Carter’s failed economic policy.  This time our 7% milestone has been achieved while inflation is on the climb thanks to Joe Biden’s failed economic policies.

Carter’s mess was created by regulation, policies and oil prices.  Biden’s mess is created by the same and much more.

Yes, it will be getting worse.

That weird picture with the Bidens and the Carters comes to mind.  The scale within the picture is appropriate when considering inflation and what is to come.  Biden’s inflation is much larger than Carter’s.

As you know, the top line number of 7% is a false premise.  We are feeling much, much higher overall prices in our lives with gasoline, home heating fuel, electricity costs, housing and the astronomical prices at the grocery store.  The BLS data is backward looking, meaning it was compiled in early December 2021 for comparison to December 2020.  Where we are CURRENTLY is much worse than where we were in early December.

We are feeling the front side of the inflation hurricane right now. The consumer prices at end of January and through February are now reflecting new purchase order prices and contract prices to wholesalers, buyers and retailers.  The higher energy costs, fuel costs, warehousing costs, transportation costs and delivery costs are cumulative. As a result, the December report is simply the precursor to what will be much more damaging inflation data in Feb (showing this month) and March (showing Feb).

Additionally, the BLS data captured gas prices at their slight drop from oil prices in late November and early December.  The price of oil has now gone even higher, and the price of gasoline is once again on the rise.  We have not yet seen the worst of this folks.  Hopefully most are prepared.

I modified BLS Table-1, taking out some of the noise, to give the snapshot of how the bureau is compiling data:

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The snowball effect of cumulative inflation is going to be on display tomorrow when the BLS inflation data from December is released.  We have previously discussed the unavoidable price increases as noted within the November data Here, and within the producer price data Here.

While the data being released tomorrow is backward looking, we are in the eye of the inflation storm right now.  The consumer prices at end of January and through February are all reflecting new purchase order prices and contract prices to wholesalers, buyers and retailers.   As a result, the December reports will be the precursor to what will be much more damaging data in Feb and March.

White House spokesperson Jen Psaki began trying to get ahead of the consumer price release with a short briefing to the traveling press pool earlier today.  A short audio-only soundbite reflects the political problem the White House knows they will soon be dealing with. LISTEN:

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