DURHAM – Executives’ optimism about their own businesses and the US economy continues to climb, but worries about the availability of people to fill jobs and inflation are also growing, says a new Duke University CFO survey.
Optimism has returned to levels last seen before the pandemic struck in March 2020 with the stock market at all-time highs and economy growth being ropust.
But the recovery is not without challenges. For example, millions of jobs remain unfilled as the unemployment rate continues to slide from pandemic highs.
Labor worries topped execs’ concerns.
More than 70% of small firm respondents and 80% from large firms said they were having difficulty in finding new workers.
And having open jobs hurts, the survey found.
“The widespread labor shortages are not without cost,” the survey done in conjunction by Duke’s Fuqua School of Business and Federal Reserve Banks in Richmond and Atlanta. “. More than half of the 75 percent of firms that reported challenges finding workers also reported that the worker shortage reduced revenue—and this was even more pronounced for small businesses. Aggregated across the panel, labor shortages alone cost the economy 2.1 percent, or $35.1 billion, in lost revenue.”
Then there is inflation.
“Approximately 80 percent of respondents reported larger than normal cost increases that are anticipated to last for many months. Much, though not all, of this increase is expected to translate into price increases,” the study notes.
Note: The dashed vertical line denotes a moderate change in the question wording and presentation. Duke CFO Survey graphic.
“CFOs expect revenue and employment to rise notably through the rest of 2021,” said Sonya Ravindranath Waddell, vice president and economist at the Federal Reserve Bank of Richmond, in a statement. “Nonetheless, well over a third of firms anticipated worker shortages to reduce revenue potential in the year. With so many firms unable to find the employees or inputs to meet the demand for their products and services, it is not surprising that respondents anticipated both cost and price increases.”
