BlackRock Investment Institute

Macro insights

Supply constraints

Current supply constraints are among the most severe of the last 75 years – see the chart – and are largely behind the high inflation prints we have seen over recent months. This unusual situation of supply-driven inflation is creating confusion among policymakers and markets. The usual logic for central banks to lean against inflation early doesn’t apply. Supply chain imbalances are the result of supply-related factors, including labor tightness, semiconductor shortages and transport bottlenecks. Extraordinary demand – fueled by goods consumption, accumulated household savings, rising capex and generous fiscal policy, particularly in the U.S. – is adding to supply pressures. 

Historical highs

Chart our supply constraint indicator at the highest level since the 1940s

Sources: BlackRock Investment Institute, with data from Haver Analytics and ISM, November 2021. Notes: Index of manufacturing supply constraints is based on ISM survey indicators: supplier delivery times, backlog of orders, prices paid and inventories. The grey bars highlight episodes of peak supply chain constraints.

Demand looks set to remain robust in 2022, but we expect supply to gradually rise to meet demand as most bottlenecks dissolve and the powerful restart of economic activity runs its course. Large companies appear well positioned to manage through the disruptions thanks to their scale, preferential access to supplies, greater capital expenditure and pricing power.

Recent macro insights

Manufacturers to slow production
Manufacturers have slowed production substantially in both the U.S. and the euro area, according to survey data.
Financial conditions tightening fast
U.S. financial conditions have tightened a lot since the start of the year – in other words, financing is becoming more costly for individuals and companies. Since then, th...
Less optimism on growth
Economic growth forecasts for this year and the next are coming down rapidly. The OECD last week followed the World Bank in downgrading growth forecasts.
Elga Bartsch
Head of Macro Research
Read bio
Nicholas Fawcett
Macro Research

Stay ahead of markets with the latest insights from the BlackRock Investment Institute

Please try again
First Name *
Please enter a valid first name
Last Name *
Please enter a valid last name
Email *
Please enter a valid email
Investor type *
This field is mandatory
Location *
This field is mandatory
Company *
This field is mandatory
Thank you
Thank you for your subscription!
We usually publish weekly insights on every Monday. Expect to receive your first newsletter from us this upcoming Monday.