Few CEOs in U.S. Expect Quick Taming of Inflation, Survey Shows

By Vince Golle

Ongoing supply constraints along with faster growth in worker pay indicate U.S. inflationary pressures will persist even if the Federal Reserve raises interest rates this year as they are widely expected to, a survey of chief executive officers showed Feb. 9.

Roger Ferguson, chief executive officer and president of Teachers Insurance & Annuity Association of America (TIAA), speaks during Bloomberg’s fourth-annual Year Ahead Summit in New York, U.S., on Tuesday, Oct. 25, 2016. The summit addresses the most urgent topics for 2017 and beyond–how power shifts in global politics will affect free trade and financial markets; industry-moving innovations in AI, robotics, and life sciences; the biggest investment opportunities for 2017; and how organizations are working to increase diversity, solve the skills gap, and decrease the wage gap.

Almost 75% of CEOs said rate increases are unlikely to quickly bring down inflation, according to the Conference Board. Some 27% of business leaders also indicated they plan to pass on higher transportation and labor costs within six months and another 45% expect to do so within six to 12 months.

The struggle with higher inflation, labor shortages and the recent omicron variant of the coronavirus resulted in another drop in CEO confidence, according to the Jan. 17-31 survey from the Conference Board in collaboration with the Business Council. The gauge fell by 8 points to 57 in the first quarter, the lowest since the third quarter of 2020. In the second quarter of 2021, the index reached an all-time high of 82 and has fallen by 25 points since then.

“CEOs are preparing for supply constraints and wage inflation to persist well into this year and potentially beyond,” Roger Ferguson, vice chairman of the Business Council and former Fed vice chair, said in a statement. “While interest-rate hikes should help dampen inflation, few are expecting prices to stabilize rapidly.”

Some 85% of respondents expect wages to rise by at least 3% in the next year, up from 79% who said so in the previous survey. 

More stories like this are available on bloomberg.com.

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