Supply chain disruptions became a significant challenge for the global economy when the COVID-19 pandemic struck in early 2020. The New York Fed developed a new series called the Global Supply Chain Pressure Index-GSCPI. Essentially it integrates several commonly used supply chain-related indices intending to provide a comprehensive summary of potential supply chain disruptions.
The series plots the standard deviation from the average value, and over time, the data bounced around zero except for the “Great Financial Crisis” in 2008. During the pandemic, we saw our first three and a subsequent four standard deviation events representing the peak in November 2021. The good news is that the line has moved down substantially and returned to its historic normal range. We have confirmed this return to normal through conversations with the various management teams we speak with. Ultimately, this will show up with reduced dislocations and price pressure, as we are beginning to see.