American companies are finding it increasingly tough to find workers, CNN Money reports. A survey done by the Federal Reserve concluded that there are labor shortages all over the country. As a result, wages are increasing. And because of these shortages, companies are losing business.
In California and nearby states, the labor shortages are widespread. The banks there have long-term vacancies and have trouble finding qualified candidates. Also, farms and factories are reporting shortages. On the East Coast, especially in New England, restaurants can’t find enough waiters and cooks, while some manufacturers delay production.
There are also shortages of truck drivers, leading to vehicles standing idle. Similar issues are faced by the construction industry all over the country. There are even problems with finding unskilled workers.
The American economy is doing quite well. But there are factors that could derail it. “Keeping the economy on a sustainable path may become more challenging. There are some significant storm clouds over the longer term,” claimed Mr. Dudley, Federal Reserve Chairman for New York.
One factor is rising consumer debt. The last recession, known as the Great Recession, occurred ten years ago and was due to the subprime mortgage crisis. Now, debt related to mortgages, students loans, auto loans, and credit cards has been rising for the past few years, and has reached $13 trillion, which is two percent higher than in 2008.
Delinquency rates are already rising, and debt payments as a percentage of disposable income are rising too. This leads to another threat: the hiking of interest rates. The problem is that the rates are already abnormally low, and hikes could bring a spike in consumer debt delinquencies. This economy, no doubt, is fueled by ultra-low interest rates. This can’t last forever, unless the policymakers are willing to risk high inflation.