Global supply chain disruptions and United States industries: Winners and losers

Objective: The article aims to examine how pressure in the global supply chains affects United States industry-level equity returns and volatility, showing which sectors are winners and losers under high- versus low-pressure regimes. Research Design & Methods: I adopted a quantitative design, modelling 49 U.S. industry-portfolio returns from January 1998 to June 2024 using a two-regime Markov-Switching autoregressive model with transition probabilities that are a function of the global supply chain pressure index (GSCPI). Findings: Heightened pressure cleaves the cross-section: commodity and capital goods industries enjoy higher long-run returns, while defensives outperform only in tranquil periods, so the regime shift turns winners into losers and vice-versa. Moving into the high-pressure state also amplifies volatility across most sectors and pushes roughly half of them into negative territory, revealing a stark volatility-growth trade-off. Implications & Recommendations: Regularly tracking supply-chain pressure allows investors and policymakers to anticipate shifts in sector-level risk-return profiles and to adopt broad, resilience-enhancing strategies to smooth market volatility and sustain economic stability. Contribution & Value Added: The article introduces a regime-switching model linking global supply-chain disruptions to the U.S. sectoral equity dynamics, uncovering asymmetric effects on returns and volatility that linear models overlook.