Using Beige Book Text Analysis to Measure Supply Chain Disruptions

Abstract

chain has been racked by disruptions. A shortage of semiconductor chips has crimped the production of automobiles and other consumer durable goods; a shortage of workers has caused difficulties both producing and transporting goods; and lockdowns in China are likely to compound these and other existing issues. Economists at the Federal Reserve Bank of St. Louis and elsewhere have been studying the economic effects of global supply chain disruptions since the onset of the pandemic.1 One of the most pernicious effects has been a rapid acceleration in CPI inflation, which reached a 40-year high in May. Higher inflation reflects both a surge in demand—fueled in part by aggressively expansionary monetary and fiscal policies—and a reduction in supply, which many economists have attributed to supply chain disturbances.