Armstrong Economics Blog/North America Re-Posted May 12, 2022 by Martin Armstrong
COMMENT: My sister in Texas begged me to mail her formula for the past two weeks. She has been close to rationing the milk she gives her 4 m.o. son. The shelves are empty and there is no baby formula in sight! There have been news stories but it has not been discussed enough. My sister is scared for her baby and the stores by me are also low on formula. I am limited to what I can purchase in one trip and drive to multiple stores each week. What do we do when the day comes when nothing is available?
-A Concerned Aunt
REPLY: We have entered the baby formula rationing stage of Biden’s presidency. I am glad you were able to find milk for your nephew because shortages have been recorded across the country. Datasembly reported that formula shortages reached 8% during the first half of 2021. From November 2021 to the beginning of April 2022, baby formula shortages reached 31% which was cause for concern to everyone but the FDA and the White House. As April continued, the out-of-stock rate spiked to 40%! During the last week of April, at least seven states reported a 50% or greater shortage in supply.
Target and Costco are rationing online baby formula purchases. CVS and Walgreens announced weeks ago that they would do the same. The FDA recalled three brands of formula in February after finding traces of bacteria, but that is only one factor for the shortages. Formula inventories were already down 17% on an annual basis in January prior to the recall. The ongoing supply chain issue is to blame as products simply cannot be delivered fast enough to meet demand.
The White House downplayed the issue and blamed the shortage on the recalls. “The FDA issued a recall to make sure that they’re meeting their obligation to protect the health of Americans — including babies who, of course, were receiving or taking this formula — and ensure safe products are available. That’s their job,” Psaki said in a lighthearted manner. They will be hard-pressed to fix an issue if they do not understand how it evolved. Despite manufacturers working around the clock, the shortage cannot meet the demand at this time.
I cannot advise on what to do; I can only comment on the reason for the shortage. However, I would encourage mothers to speak with their pediatricians. Watering down formula is extremely dangerous, and not all will respond well to a switch in brands. I could also suggest avoiding hoarding, but we all act in our own self-interest, as Adam Smith said, and I would not blame a desperate mother for taking extreme measures. The Biden Administration should have addressed this issue at the beginning of the year, but per usual, they waited until it became a full-blown crisis.