This writing is not intended to be political. It’s meant to be a recognition of the cause-and-effect relationship between government policy and the environment we live in. In reality when government policy positively impacts a segment of the economy – it often negatively impacts others. At the time of this writing there are several major policy decisions that are having a significant impact on our lives.
When the pandemic occurred – businesses were shut down and people were isolated. This resulted in a huge decrease in economic activity. To compensate for this a great amount of government spending ensued in the form of Covid relief funds. Businesses were provided with funds to assist in staying open and retaining employees. People were paid to stay home. This resulted in a major increase in money in the economy which in turn caused an increase in demand for goods and services. At the same time the forced shutdowns resulted in supply chain disruptions which caused a reduction in supply. When demand exceeds supply inflation results.
In times of inflation the Federal Reserve will increase interest rates thus tightening the money supply. The intended effect of reducing the money supply is to reduce demand thus cooling inflation.
The push for green energy and electric vehicles is having an impact on gasoline powered vehicle production. As electric vehicle usage grows – labor and part requirements for automobiles will diminish. This policy combined with inflationary pressures has brought on a strike by the united Auto Workers Union.
The current economic environment presents significant challenges for the automotive repair industry. Costs are up and customers are faced with resource constraints. Auto repair shop owners must be very diligent in managing their way through this. Extra care must be taken to control costs and remain profitable.