A Penny for Your Thoughts... if you can find one.

Bankers thought the nationwide coin shortage was over, as the U.S. economy reopened and previously housebound consumers were able to unload more of their change.

But a combination of factors — including government stimulus payments, accelerated consumer spending and the threat of the COVID-19 delta variant — has stymied progress and forced retailers to resort again to asking shoppers for exact change. After lifting the limits on some coin orders by banks at the end of last year, the Federal Reserve reinstituted them in May.

The recovery in coin circulation has been slow, said Jim Gaherity, CEO of the coin-cashing machine operator Coinstar. “Instead of going miles a month, it’s going yards a month,” he said in an interview.

The nationwide coin shortage, which began last year, has reemerged as a problem for merchants and banks. "It began with the virus, and it will end with the virus,” said Steve Kenneally, senior vice president at the American Bankers Association.

The United States Mint is responsible for the production of coins, and the Fed controls their distribution to banks. Banks, which keep coins on deposit at the Fed, can order more as they are needed to distribute to merchants that provide change on transactions at cash registers.

Limits are currently in place for pennies, nickels, dimes and quarters, a Fed spokesperson said. That’s because coin orders from banks began to increase again in March 2021, outpacing the volume of coins that banks were receiving in deposits.

The Fed believes the renewed coin shortage has been the result of a normal seasonal increase in demand for coins, coupled with the impact that the third round of economic impact payments had on low-income families that no longer needed to use coins to pay bills, and the higher use of coins for transactional purposes as the economy reopened, according to the spokesperson.

Production capacity at the U.S. Mint is just about maxed out. The agency has manufactured more than 20 billion coins since January, which is close to a record level. About $18 billion in coins remain in Americans’ homes, Gaherity estimates.

Gaherity, along with officials from banking trade groups and the U.S. Mint, is part of a task force that the Fed formed last year to tackle the problem. The group issued a public service announcement in July, again calling for consumers to get rid of their change.

“We cannot manufacture our way out of this problem,” Mint Director David Ryder said in the video.

A healthy circulation of coins hinges on a cycle of commerce that went largely unnoticed until the pandemic.  It’s not a supply problem, but a circulation problem.

Particularly in the early months of the health crisis, there was confusion about how easily COVID-19 could be transmitted through paper currency and coins. Consumers shopped in stores less frequently, and when they did, they were more likely to pay with debit or credit cards.

By last summer, the coin shortage had become so severe that some banks were offering consumers bonuses for depositing their change. Banks also resorted to stockpiling coins and strategically moving them between branches.

After a period of improvement, the problem was exacerbated when the Biden administration sent out stimulus payments in March 2021. Many struggling Americans who had previously cashed in coins to pay bills or buy groceries no longer had to do so. Activity at Coinstar vending machines slowed down, according to Gaherity.

“The stimulus has had a significant impact on folks who are cash-preferred,” he said.

While the circulation of coins has been increasing, albeit at a slower-than-expected pace, officials are now worried that the delta variant may keep would-be coin depositors at home once again.

As goes the spread of COVID-19, so goes the availability of coins, said Steve Kenneally, senior vice president at the American Bankers Association and a member of the Fed’s task force.

"It began with the virus, and it will end with the virus,” he said.