President Joe Biden’s top economic adviser said that a shortage of semiconductors last year probably shaved a full percentage point off U.S. economic output in 2021, and that administration officials will brief Congress on the crisis Wednesday.
“We are 100% vulnerable to foreign supply chains on those advanced semiconductors,” the director of Biden’s National Economic Council, Brian Deese, told reporters at a breakfast hosted by the Christian Science Monitor on Wednesday. “The best estimates are that the lack of available semiconductors probably took a full percentage point off of GDP in 2021.”
Commerce Secretary Gina Raimondo, White House National Security Adviser Jake Sullivan and Deputy Defense Secretary Kathleen Hicks will hold a classified briefing on Wednesday for lawmakers on the chip shortage, Deese said.
Supply-chain bottlenecks quickly emerged in the vital semiconductor industry when pandemic-related lockdowns took effect in locations spanning the globe. Combined with a surge in demand for goods -- spurred by consumers shifting their spending away from services -- that caused a dire shortage of chips, affecting the automobile along with many other industries.
Auto-industry sales fell about 20% in the fourth quarter of 2021 and suffered the worst second half since the Great Recession more than a decade ago. The mis-match between supply and demand has propelled prices not only of new vehicles, but used ones as well -- contributing to inflationary pressures that are undermining American households’ finances.
The White House is calling on Congress to enact a bill that includes nearly $52 billion for the semiconductor industry, to stoke domestic production and ease supply-chain strains over time. It’s part of broader legislation aimed at strengthening U.S. competitiveness against China.
The Biden administration has also been seeking to coordinate with allies such as South Korea on building supply chains of nations friendly to Washington.
Deese said Wednesday that more than a dozen members of Congress will participate in the classified briefing. Among them: GOP Senators John Cornyn, Todd Young and Rob Portman, he said.
This article was provided by Bloomberg News.