Supply Chain Monitor - August 16, 2023

Last Update: Thursday, August 16, 2023
Next Update: Friday, September 1, 2023

This is the Final Supply Chain Monitor in this exact format. Starting in September, newsletter subscribers will receive updated monitors as each data source comes out, along with commentary that focuses on how each new data release impacts our understanding. The monthly release explaining the new G.17 Industrial Production data will then be public. This change is reflected in the “Next Update” field above.

At Employ America, we have argued that shortages of physical productive capacity played a major role in the inflation seen during and after the recovery from the pandemic recession. In order to analyze the impacts of shortages and their resolution, we have been tracking reported shortages and comparing them to indices of industrial production and prices faced by producers. How the path of investment and production evolves after a period of reported shortages is likely to be highly suggestive for the path of a number of other important economic dynamics, most especially the labor market and increasingly relevant energy transition dynamics.

Four Basic Supply Chain Statuses Right Now:

Still Dealing With Pandemic Disruption

Semiconductors, as well as electrical and electronic parts have been reported in short supply for almost three years at this point. On the one hand, this is a testament to how long-lasting disruptions caused by the pandemic proved to be. On the other hand, this is a suggestion that there may be still more room to run in the supply-side recovery. Some sectors whose products require some amount of electrical or electronic pieces to operate are seeing their PPIs rise faster than the average. Although most supply chains have healed, there are still some dealing with pandemic-era shortages.

Foreign-Domestic Pivots

There are some sectors where we see falling imports against rising domestic production, suggesting a relatively straight swap from foreign capacity to domestic

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