I am sure that is a part of it but I am not so sure it is really completely driving the handgun and handgun ammo shortages. I am seeing a lot of pink guns and smaller guns lately which tells me that the overall market may changing/expanding. The fact that .22LR is not in plentiful supply also tells me that increased recreational shooting is probably driving some of the shortages too. That is plinking ammo not home defense or conceal carry stuff. Shotgun ammo (big in home defense) seems in good supply. But handgun ammo (.22LR, 9mm, 45Auto, 40S&W) is tough to find in good quantity - and up in price for what is out there.
I'm thinking this guy might be a right-winger: http://www.meetthenra.org/nra-member/tom-king Selected quotes: (King's comments in red) I'll have a few molotovs, a dozen grenades, that launcher there and half a dozen rockets, that can of ricin, and throw in a tactical nuke. Here's a buck fifty. Soooooo, when people go hunting for moose and grizzly, he'd say "Just bring your single-shot .22, and you'll be fine!" What an idiot lol lol He says it is so, and so it must be. So. Oy. Yeah, we drink it, bu ours was sugary, while yours was an enema. Shooting imaginary pink elephants is a glob-given right! A partial quote below. The full quote is far more interesting, but it's a bit lengthly to put here considering the amount of quotes above. Oh, the injustice of it all! Read more at your leisure, using the provided link (in blue), or your own research.
That the price is up means they want to take advantage of the demand lol Supply and demand is probably the really big reason for the increase in prices. The supply is down, so they (ammo/gun retailers) raise the prices of what they have in stock. That'd be my guess, anyway. What caused the supply to drop was the fear that it wouldn't be available, if Obama "Took all our guns!", so yeah, IMO, it (the failed legislation) played a big role in why you can't find certain ammo and also why prices got hiked.
I neglected to comment on the lesser caliber weapons "flood" on the market. As I see it, it works this way: The threat of losing the right to own guns and ammo led to a rush on supply. Most people probably wanted the larger calibers, and they likely drained the supply of them (leading to increased prices). The larger calibers are more expensive and time-consuming to make, so as the supply of these waned, the option to make cheaper, smaller-caliber weapons was probably viewed as ideal, as they can be made cheaper and faster, resulting in a better profit margin overall. Part of the reason to go that route may be the assumption that "newbies" to gun-ownership will buy any gun, any smaller-caliber gun, when the larger ones are out of stock. How much THAT played a part is vague, but it makes sense, profits-wise. It could also be as simple as they have a huge stock of the smaller-calibers though. IMO, of course lol
"A great deal of intelligence can be invested in ignorance when the need for illusion is deep." —Saul Bellow, To Jerusalem and Back, 1976