Supply Chain Shock In Manufacturing | S2 E139 | 04-16-2026

A geopolitical shock doesn’t stay on the map, it shows up in the data. Today we walk through fresh manufacturing and business activity numbers that hint the war with Iran is starting to ripple into the US economy, especially through supply chain disruptions and rising input costs. If you track markets, inflation, or economic growth, these small releases can be the early signal before bigger indicators catch up. 

We start with industrial production, which comes in weaker than expected with a 5.5% monthly decline. The detail matters: autos take the biggest hit, a classic sign of parts delays and shipping friction. At the same time, we see strength in computers and electronics and in defense, a reminder that AI spending and strategic demand can stay resilient even when other sectors slow. Utilities move higher too, adding another layer to how uneven this moment is across the economy. 

Then we dig into the New York Fed Business Activity Index, formerly the Empire State Manufacturing Index. The business climate drops sharply, supply availability falls hard, and the prices paid component jumps to the highest level since 2022, with elevated expectations looking six months out. That combination raises a key question: how much of this supply chain stress turns into sustained inflation pressure, and what does that mean for consumers and future growth? If you found this helpful, subscribe, share the show, and leave a review, what signal are you watching most closely right now?

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Transcript

War Impact Meets Fresh Data

Megan Horneman 0:00

We're getting some more data out of the effects of the war with Iran, specifically in the manufacturing side of the economy. It's Thursday, April 16th, and this is Markets with Megan. If you like this podcast, subscribe, hit the alarm bell, share it with your friends, family, colleagues, anybody that might be interested in this data we get every day. What makes the headlines and what does it mean for the markets? So let's dig into what we got this

Industrial Production Misses Forecasts

Megan Horneman 0:24

morning. We got a couple pieces of data on manufacturing and business activity. Let's start with industrial production. It actually was weaker than was expected. Industrial production declined 5.5% for the month. Now it did get upwardly revised for the month of February by quite a bit, but it did decline in

Autos Hit By Supply Disruptions

Megan Horneman 0:46

March. The biggest drop we saw was in autos, and that could be part of the supply chain disruptions out of the Strait of Hermuz. Utilities. We saw an increase though in computers and electronics and, of course, defense. So that means the AI spending there with those computers and electronics is still going strong regardless of what's going on in the Middle East.

New York Fed Index Slides Hard

Megan Horneman 1:07

But when we look at the New York Fed Business Activity Index, this used to be the Empire Fed Manufacturing Index, you're looking at a steep drop in the business climate. It was had a lot to do with concern about the overall economy given what's going on in Iran. But we also saw a very big drop in the supply availability. So that is where those supply chain disruptions are coming in.

Inflation Risks And Market Reaction

Megan Horneman 1:34

The other big concern, which has been seen in other manufacturing surveys, is the prices paid component. We saw the prices paid component jump to the highest level since 2022. And that's just what people think of the current climate. When they also they also are asked about the next six months ahead, and you saw that prices paid component jump up as well. So we're starting to see some of this the impact come into the data. The markets are shrugging it off. Um, these aren't usually big market moving uh like uh economic pieces of data, but for us, we're looking at every tidbit to see how much of a supply chain disruption will filter into the economy. What does it mean for inflation, and ultimately what does it mean for the consumer and economic growth? That's all we have. If you want a history of our podcast, you go to marketswithmegan.fm