Seeing Is Believing: Supply Chains Remain Tangled

You’ve seen the effects of global supply chain pressures: empty car dealership lots, relentlessly higher prices at the gas pump, bare shelves where baby formula should be. Unfortunately, a new economic index confirms that the supply chain problem is still headed in the wrong direction. 

The New York Federal Reserve’s new Global Supply Chain Pressure Index, launched this week, shows that supply chain delays got worse in April after having dropped considerably from the peak they reached in December 2021. The chart below shows just how quickly supply chain problems have taken a turn for the worse. 

The index, which uses data going back to 1997, aims to provide a monthly look at just how intense disruptions in manufacturing, shipping, and other elements of the supply chain have become. It incorporates 27 different indicators from shippers, manufacturers, and other players involved in the complex process of making stuff and getting it to its final destination. 

Global shipping delays caused by the pandemic are a major reason everything has been getting more expensive, economists say. For example, shortages of computer chips have had massive ripple effects throughout industries that rely on those chips, causing car manufacturers to cut their output despite high demand for vehicles. That’s made cars harder to find and driven sticker prices through the roof. 

The Russian invasion of Ukraine in February added to the chaos by disrupting the flow of critical materials like oil and grain, pushing up the price of gasoline and food. More recently, the shutdown of a baby formula factory because of contamination has caused a nationwide shortage of formula, throwing some families into crisis.

“Everyone across the global economy has been impacted by factory shutdowns, mobility restrictions, and widespread lockdowns during the COVID-19 pandemic,” Jan Groen, economic research advisor in the New York Fed’s Monetary Policy Research Division, said in a statement. “Our index provides one bird’s-eye view of potential disruptions.”

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