Will the consumer shortage cause prices to go up or down?

Answer 1

Temporarily the prices of the types of items not selling will drop dramatically, like they have this Christmas season.

The retailers have already bought the stuff and if they don't get rid of it by 12-31 they get to pay taxes on it. So, they slash prices to get it off their shelves and out of their warehouses.

Eventually, as we really get into this recession prices will start to skyrocket as more and more people lose their jobs. Less sales will be made and forecast to be made, the retailers will buy less for their stock, so there will be more "shortages" and prices will go up.

HOWEVER, food & fuel prices are going to continue to skyrocket as China and India (who have over 10 times the population that we do) become richer and buy more of our food and fuel. Not to mention the ethanol fraud that is being pulled.

So, in summary, times are going to be real tough for many "average" Americans. BUT, the rich will get richer, the poor will gain members and the govenrment will grow ever larger thus exacerbating our problems.

Hang on folks, it is going to be a bumpy ride.

Answer 2

It's supply and demand. If there is not enough to go around, the prices go up and people will pay the higher prices. If there is too much of something, then people will look for the best price so companies try to compete and lower their price, something is better than nothing.

Answer 3

The whole supply and demand thing fell by the wayside a long long time ago. Scarcity drives up prices. A glut of a product tends to reduce sales/distributor, so prices go up to compensate for reduced sales.

What is indoctrinated in the schools is more than half a century out of date.

Answer 4

Normally as supply increases prices decrease and as supply decreases prices increase. However the caveat is when government gets involved all bets are off.