Board of Governors of the Federal Reserve System

Figure 1. The Shortage Index

Figure 1 consists of a single black line that charts the Shortage Index from 1900 to 2026. The y-axis measures the index, where the average from 1900-2019 is set to equal 100. The y-axis ranges from 0 to 1200. The line begins in the 30-50 range, spiking in 1919 to around 600 with a label on the spike of “Coal shortages”. Spikes also occur in the 1940s (due to oil, labor, food shortages, and strikes) and in the 1970s (energy and gasoline shortages) with levels reaching 1100 in both of these decades. The index also increases from the outset of 2020 (COVID), and begins to creep up in the months since the beginning of 2026.

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Figure 2. The Shortage Index by Category Since 2020

Figure 2 illustrates the evolution of the Shortage Index, consisting of a cumulative overall value and four subcomponents, from 2020 to 2026. The data are monthly. The y-axis is the value of the Index, where the average from 1900 to 2019 is set equal to 100. The y-axis ranges from 0 to 600. There is a vertical line on February 28, 2026, labeled “Middle East conflict”. The overall index is a solid black line that begins in January 2020 at roughly 70, and then spikes briefly in the spring of 2020, and spikes again over 2021-2022 to reach a maximum of 550. The overall index then steadily declines to 100 and remains there from 2024 to 2025 before spiking to around 250 in the spring of 2026. The subcomponents of the overall index are split into labor (orange bars), food (green bars), industry (blue bars), and energy (red bars), all stacked on top of each other to add up to the value of the overall index. All four components follow similar patterns to the overall index, spiking in 2021-2022 before moderating over the next four years. In the spring of 2026, only the energy component spikes from roughly 20 to 100. In the year 2020, the blue industry bars make up the majority of the overall index, while from 2021 to 2025 the orange labor bars make up most of the overall index value. In 2026, after the beginning of the conflict, the red energy bars make up the majority of the overall index value. Source: FRB staff estimates based on Dario Caldara, Matteo Iacoviello, and David Yu (2025), “Measuring Shortages since 1900,” International Finance Discussion Paper 1407 (Washington: Board of Governors of the Federal Reserve System, May).

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Figure 3. The Adverse Economic Effects of Shortages

Figure 3 consists of three panels that show the impulse responses associated with a shortage shock of the size estimated to have occurred since the start of the conflict. The first panel is labeled “Shortage Index”, where the y-axis is an index that ranges from 0 to 120. The x-axis on all three panels is the number of quarters since the shock. The shortage index, with gray confidence intervals on top and bottom, remains above the no-shock baseline for several years, peaking at 100 and declining to less than 20 by the end of the projection period. The second panel is labeled “World GDP Growth”, where the y-axis is percentage points and ranges from 0 at the top to -0.7 at the bottom. The black line, similarly bounded by gray confidence intervals, drops to less than -0.4, before steadily rising back to less than -0.1 by the end of the projection period. The third panel is labeled “World Inflation”, and the y-axis is in percentage points and ranges from -0.2 to 1. The black line, bounded by gray confidence intervals, increases to around 0.5 two years after the shock and then slowly declines to 0.45 by the end of the projection period. Shaded areas denote 80 percent confidence intervals.

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