Costco shoppers hoarding toilet paper again is bad for the economy

• Costco shoppers say the warehouse is running out of toilet paper and water - again.
• As Delta surges, some Americans are showing signs of returning to stockpiling.
• It could exacerbate the supply chain crisis that America has been dealing with all year.

It's never a good sign when American shoppers start hoarding goods from Costco.

When the pandemic first hit the US last March, Costco stores were mobbed with panic shoppers bulking up on staples like toilet paper and water, leaving stores dry of necessities. As the highly contagious Delta variant surges across the US, Costco-goers have taken to Twitter to complain about shortages of toilet paper and water at the warehouse again, as well as restrictions on the number of products they can buy.

One customer tweeted: "Headed to Costco and I'm buying all the damn toilet paper," while another in California said the shortages could be a "sign of the times to come."

It indicates that shoppers may be back to stockpiling goods, reported Insider's Mary Hanbury, but it's not just Costco consumers. With hospitals in less-vaccinated regions becoming overcrowded and mask recommendations returning, the Delta variant is sparking fears of a repeat of 2020. These Costco anecdotes suggest Americans are responding just how they did a year ago - by preparing to stock up.

Nearly three-fourths of Americans (69%) said they would consider replenishing their stockpiles of groceries and essentials, according to a survey conducted by the analytics firm Inmar Intelligence that polled 1,000 people.

Stockpiling could exacerbate the supply crunch that has been plaguing the economy throughout the year, just at a time when it looked like things might finally be righting themselves.

A return to hoarding could worsen supply chain issues

America reopened to a more expensive economy than the one that existed pre-pandemic, thanks in large part to a supply chain crisis that resulted from a cocktail of factors.

Early in the pandemic, manufacturers struggled to estimate demand in a work-from-home economy while also halting factory production for safety reasons, resulting in a shortage of materials. As unpredictable consumer behavior surged earlier this year, imports picked up speed, clogging shipping ports and resulting in shipping delays. Bad weather, from February's Texas Freeze to the drought in Brazil, only compounded matters.

As stimulus checks and pandemic savings unleashed a wave of pent-up consumer demand that ran up against the widespread supply shortages and bottlenecks, businesses began to jack up prices and inflation hit Americans' wallets. The Consumer Price Index rose 0.9% between May and June, much more than the consensus estimate of 0.5%.

There have been recent signs that both the supply crunch and inflation could slowly be abating. Major retailers, including Levi Strauss & Co., Mattel Inc., and Hasbro Inc. all saw fewer imports in July, according to an S&P analysis from earlier this week. The ratings agency said this might suggest the import boom that stemmed from the economic reopening and vaccination rollout may be slowing down.

While inflation remains elevated, it also slowed its roll last month as price hikes waned. The Biden administration said it expected inflation to cool as supply chains heal and the economy normalizes.

The supply chain hasn't fully rebalanced, though, signaling that Americans' spending behavior in the face of Delta could add "a speed bump in the recovery," in the words of Michelle Meyer, Bank of America Research's chief US economist. In a note published Friday, Meyer wrote that recent softness in spending on the back of Delta shows the economy might have "a bumpier path ahead than we had initially thought."

As Hanbury reported, consumer stockpiling could become an even bigger issue for grocery stores now than earlier in the pandemic since retailers are still grappling with these supply-chain issues, as well as a labor shortage.

The economy has faced a lot of problems during the worst pandemic in a century. It would be something if the typical American overloading on toilet paper turned out to be another one.