Shortages linked to the Middle East conflict have pushed the Federal Reserve’s news‑based shortage index to 175 in May 2026, 75 percent above the long‑term average. The index, derived from a textual analysis of 25 million U.S. newspaper articles, tracks mentions of food, industrial, labor, and energy shortages. Recent spikes are driven mainly by energy and industrial supply disruptions and, to a lesser extent, AI‑chip shortages. Econometric analysis projects that a shortage shock of this magnitude could reduce global GDP growth by about 0.4 percent in the first year and 0.8 percent cumulatively over three years, while headline inflation would rise roughly 0.2 percent in the first year and 1 percent over three years. The study underscores how persistent media coverage of shortages can signal lasting economic slowdown and price pressure.
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