The Shortage Index: measuring global supply-chain disruptions

As US-Iran hostilities continue to throttle global energy supplies and reignite inflation, it’s a timely moment to add the Shortage Index to our platform.

Conceived by two academic economists, the Shortage Index samples millions of articles across publications including the New York Times and Wall Street Journal, looking for mentions of terms such as “bottleneck” or “rationing.” It then generates shortage indices for industrial production, food, energy and labor.

A historic analysis shows that the World Wars, 1970s oil embargoes and COVID-19 were the four biggest shortage shocks since 1900. Turning to the present, we can see correlations between the Shortage Index and commodity prices, food and US inflation metrics. (For example, recent Middle East disruptions have resulted in the Energy Shortage Index exceeding its peaks during the pandemic and 2022 Russian invasion of Ukraine.)