TRG | The Bottom Line – 7/2

Inflation & supply chain: The saga continues! Referencing the TRG’s 2021 Investing Themes thought piece, title of TRG’s Q4’20 Building Product Survey: Prepare for Inflation (published 1/15/21) has clearly played through into Q2’21. Again, inflation and supply chain challenges remain dominant themes in our Q2’21 Building Product Survey. As one national commercial contractor shared with TRG, inflation has intensified as the year has progress, with “the trifecta of pandemic, pent-up demand, and natural disasters. The world hasn’t seen this before. And the supply chain is breaking dowbb n everywhere…it’s delicate.” The words “delicate” and “fragile” have been most often used to describe the current state of the supply chain. The situation may actually worsen, as shipping will be further constrained by Christmas shipping that starts in earnest mid-summer, further limiting capacity on ships. We also are starting to hear of manufacturing plant strain, as plants previously running at a much lower utilization rate in the height of the global pandemic are now running all out. Additional price increases across the building products value chain are rolling out in order to manage rising costs.