April 27, 2026

The below transcript is a translation of the podcast audio that has been machine generated by Notta.

Hi, everyone. This is Taylor St. Germain with ITR Economics. Thanks so much for joining me on this episode of TrendsTalk. We at ITR are your apolitical and unbiased source of economic intelligence. And today I wanted to discuss supply chain pressure, especially in the wake of the recent geopolitical events that have transpired, especially over in the Middle East, the lack of volume going through the Strait of Hormuz.

So I wanted to bring some data into this conversation and put things into perspective. The very first thing I’ll comment on a few weeks back, I gave an update on our oil price forecast, which is still in place today. Again, our oil price forecast is some some higher oil prices in the second and third quarter before we get close to that 70 dollar per barrel by the end of the year. But we’re tracking supply chains closely. We’re tracking the situation in Iran closely, as well as the volume going through the Strait of Hormuz. In the months leading up to the conflict, in Iran, there were about three to four million metric tons at any given day going through the Strait of Hormuz. We look at a seven day average, so I should be clear. That’s what I’m referencing for that three to four million metric tons. That’s a seven day average. And we get these numbers in daily. As you can imagine, since the situation has transpired, we have since seen very little volume going through the Strait at times, if any at all. We continue to track that data on a weekly basis, and it allows us to update our forecast for oil in particular, as well as some other supply chain related forecasts as we see that situation evolve.

But this brings me to a broader topic, which is what type of supply chain pressure are we going to likely experience as we move later into this year into 2026? We track a data series that comes from the Federal Reserve Board of New York, which is the global supply chain pressure index. It’s an index that’s very easy for us to interpret, because any time the index values for this global supply chain pressure index are positive, it means there’s pressure in the supply chain. We see a tightening in the supply chain. We see longer lead times. Any time that index is negative, it means the supply chain is loosening back up. As you all can imagine, from 2020 to 2022, that supply chain pressure index was elevated in a way we have never seen before due to the disruptions from the pandemic on the supply chain. But if we then look at that same metric from essentially 2023 all the way up until recently, that metric was either negative or at zero, meaning the supply chain had been generally loosening back up. However, we know things go through cycles. We know supply chains have to react to geopolitical events. And if we look at the last about three months of this supply chain pressure index, it has turned positive and has continued to grow, which means there is more and more pressure on the supply chain.

So the question is, what does the second half of this year look like? Well, we have an ability to tell you that by using our leading indicators. The purchasing managers index, the PMI from ISM, is a great leading indicator for the supply chain pressure index. It is a seven month leading indicator when you look at the PMI on a one twelve basis on a month over month basis. Again, it gives us a seven month lead time into the future. In the recent ascent that we’ve seen in the PMI tells us that we are in for likely continued supply chain pressure. As we move into the second half of twenty six and likely more pressure than currently what we’re experiencing here today.

Now, folks, the readings from these data sets are not telling us we need to be ready for the pandemic level of supply chain disruption. That is not my message. But the readings from the data do tell us that compared to the last two or three years, you should be preparing for longer lead times in a more disrupted supply chain as we move into the future. Again, I think logically that’s not a surprise to most folks, as again, you see these geopolitical conflicts, the closing of the Strait of Hormuz. There’s a number of challenges, not to mention just the element of more demand, more economic growth, which is still our forecast for twenty, twenty six, both globally and here in the U.S. That breeds some supply chain pressure on its own. But again, my message is for the, you know, purchasing teams for those that manage these supply chain relationships. you are likely in for a bigger challenge in the second half of this year compared to what you’ve experienced in the past two or three years, really since the supply chain recovered from the pandemic. So don’t assume the supply chain environment that we have today is simply going to continue into the second half of this year. And again, this has real impacts on how businesses formulate their strategies from inventory levels to again, looking at these different supplier relationships that they have. So I do want you to be prepared for likely some more disruptions, some slightly longer lead times as we move into the second half of this year.

We have a lot of great data on the supply chains, which countries around the world are more resilient than others. It’s a lot of the work we do here at ITR Economics and Crowe. So if we can be useful in getting more specific to your business or just a phone call or an email away. I hope this information helps. We’ll continue to update you on current events, especially the situation in Iran here on TrendsTalk as we progress forward. Again, it’s not a straight line ahead of us. Everything goes through cycles. And that’s the important thing to understand. The biggest risk we have as businesses is straight lining what we have today from sales, from revenue, from a supply chain environment into the future. We know nothing’s a straight line in this economy. I hope this information helped. Please like and subscribe to TrendsTalk wherever you listen to your podcast. Look forward to seeing you all in the next one. Thanks so much. Take care for now.