How Covid Caused a Bagels and Cream Cheese Crisis

On the worst possible day of the week, Sunday, New York’s bagel stores are telling us that they are running out of cream cheese. Typically, they use thousands of pounds a week.

I guess we would need a new Food Combination for bagels and cream cheese:

Cream Cheese Shortage

The owner of Tompkins Square Bagels in New York’s East Village did not get his 800 pound cream cheese delivery on Friday. Similarly  Zabar’s manager has said he has enough to last him 10 days. Those deliveries refer to cream cheese pallets. Stores use huge blocks of Philadelphia Cream Cheese as the springboard for the cream cheese recipe that they mix themselves.

The NY Times tells us that there are three reasons for the cream cheese shortage: less labor in the factory, not enough truck drivers, packaging problems.

Supply and Demand

An economist would call cream cheese and a bagel complementary products. She would then point out that their demand moves together. One is a determinant of the demand for the other one. First though, we have demand increasing because of Covid. Next, in the second graph, the cream cheese supply decreases and diminishes the quantity demanded of cream cheese. Consequently, in the third graph, without cream cheese, the demand for the two or a substitute decreases.

First we can show the increase in demand for bagels and cream cheese. I am not sure though if bagel stores upped prices as shown in my graph:

Next, we can draw the cream cheese graph. Appearing a bit counterintuitive, the decrease in supply has the curve moving upward and to the left. You see there is less quantity on the demand curve:

Then, customers have said if there is no cream cheese, they won’t order the complementary product, the bagel. So our demand curve shifts:

Our Bottom Line: Scarcity

We could say that scarcity is the reason for economics. Defined economically as limited quantities, scarcity means we always have to make tradeoffs. We have to decide who gets what if we cannot have everything of everything. For that reason we wind up with somewhat of an anomaly. We can have overflowing supermarket shelves but still have scarcity.

Now though with cream cheese we have a different story. We really do have a shortage that requires a more obvious tradeoff because we cannot get what we want.

My sources and more; Thanks to Mason for alerting me to New York’s cream cheese shortage. From there, I discovered the facts in the NY Times.