What happens when there's no labor?

In early 2020, the U.S. was coming off more than a decade of slow growth and weak employment when COVID hit. This time, policymakers and the Federal Reserve acted fast to avoid the mistakes of 2008, launching massive stimulus measures like the CARES Act, American Rescue Plan, and stimulus checks, while slashing interest rates and boosting lending. This jump-started the economy, breaking the demand slump of the 2010s, but it created a new issue: a supply-constrained economy.

@josephpolitano explains that unlike typical economic problems driven by weak demand, this was about limited access to materials, labor, and transportation — all in high demand during COVID. Take car production: factories shut down during the pandemic, then struggled to restart just as demand, fueled by stimulus and low interest rates, surged. But years of underinvestment after the 2008 crisis left the industry with no spare capacity to absorb the shock. This led to skyrocketing used car prices, rising costs for new vehicles, repairs, and insurance, and ripple effects across the economy. In a sense, the demand shortage of the 2010s set the stage for the supply issues of the early 2020s.