Source: Fortune
Summary
A recent survey by the Federal Reserve Banks of Richmond and Atlanta and Duke University’s Fuqua School of Business found that while CFOs have navigated increased energy costs due to the Strait of Hormuz closure, they remain anxious about future inflation. The survey of 530 financial executives revealed a growing disparity between CFOs’ trust in their own companies versus the economy. Inflation concerns have risen, with 25% of firms naming it as their most pressing concern, up from 9.5% last quarter.
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The numbers tell one story. CFOs have absorbed increased energy costs, but remain pessimistic about rising prices. The gap between personal financial health and broader economic health is widening.
Atlanta Fed economist Brent Meyer notes that if oil prices continue to rise, pass-through rates will skyrocket to about 90%. CFOs’ concerns about the economy may soon catch up to their own bottom lines. The US and Iran’s memorandum of understanding has set the stage for a final settlement, but significant question marks loom about the aftershocks of this conflict.
The strategy enters a familiar phase: companies will likely pass on increased costs to consumers, and inflation will continue to rise.
As Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said, “We’ve been dealing with an inflation problem that’s well above the target and has been going the wrong way.”
The announcement sounds familiar: companies will navigate the challenges, but the economy will suffer.
Author: Evan Null
