A flurry of concerns about bottlenecks in production and transportation has sparked concerns over lower growth and higher inflation, or stagflation, a combination of miseries we thought we had left behind in the 1970s. However, as we examine where the hold-ups are and what is causing them, our view is that much of these supply chain disruptions are likely to ease in coming months. Sure, as the global economic recovery gathers pace, there probably will be occasional glitches in the internal plumbing of the world economy. But we do not believe that they will be serious enough to set back the recovery or to generate a permanent rise in inflation. In the longer term, however, we could see some reconfiguration of supply chains as companies learn lessons from these recent challenges. 

Where are the disruptions and what is causing them?

The supply chain mess has many, separate dimensions to it, each with its own dynamic. 

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