Supply chain bottlenecks are beginning to clear up as consumer spending returns to a more normal mix of goods and services.
Driving the news: The New York Fed’s Global Supply Chain Pressure Index (GSCPI) fell for the third straight month in July, hitting its lowest point since January 2021.
Why it matters: We’ve been dealing with one supply chain crisis after another since the pandemic threw the global economy out of whack — and it’s been contributing to runaway inflation.
By the numbers: At 1.84 points above typical levels — down from an all-time high of 4.32 in December — the GSCPI’s downward movement suggests that products are slowly moving more freely through the economy.
Flashback: The pandemic shifted spending from services to physical goods in historic fashion, creating demand that manufacturers, logistics companies and retailers weren’t prepared for.
Quick take: The swing back to services has been under way for months, exemplified most recently by hotel chains Marriott and Hilton reporting booming earnings in recent weeks.
What they’re saying: In consumer electronics, supplies have “not only caught up” but may be barreling toward “a surplus situation,” Kimball Electronics CEO Donald Charron said Friday on a conference call.
The other side: Port backups — which have driven many of the supply chain issues — remain significant, straining access to certain goods. And the global semiconductor chip shortage, key to the shortage of new vehicles, is expected to take years to resolve as companies like Intel build new on-shore factories.
The bottom line: You might still want to plan ahead on your holiday shopping list. But the situation appears to be headed in the right direction.
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