Business Expectations Regarding Unit Costs And Long-Term Inflation

The Federal Reserve Bank of Atlanta publishes a monthly report titled “Business Inflation Expectations” (BIE) that contains statistics from a survey of regional businesses’ views on various factors that impact profitability.  These factors include unit costs, unit cost expectations, sales levels, profit margins, and other factors.

As described on the site:

Approximately 300 panelists receive the survey each month. Panelists represent businesses of various sizes headquartered within the Sixth District, which encompasses Alabama, Florida, Georgia, and sections of Louisiana, Mississippi, and Tennessee. Panelists range from executives of large corporations to owner-operators of small businesses. The industry composition of the panel roughly reflects the makeup of the national economy. Nevertheless, survey responses are weighted by industry shares of national gross domestic product.

An excerpt from the January 2015 BIE Survey dated January 14, 2015 (involving 224 firms responding):

Respondents indicated that, on average, they expect unit costs to rise 1.7 percent over the next 12 months.  Inflation uncertainty was down one-tenth of a percentage point to 2.3 percent. Firms also report that, compared to this time last year, their unit costs are up 1.6 percent. Respondents’ sales levels, compared to what they consider normal conditions, remained steady, with approximately 63 percent of respondents indicating current sales levels are at or above normal. Profit margins were improved somewhat, with roughly 53 percent of respondents indicating their profit margins are at or above normal.

This month’s “quarterly question” concerned “Long-term inflation expectations.”  An excerpt:

Over the long term, that is, per year over the next five to 10 years, respondents expect unit costs to increase 2.6 percent, on average, down two-tenths of a percentage point from the October reading. Respondents’ uncertainty (variance) regarding this expectation was 2.3 percent.

This month’s “special question” concerned “Influence of price statistics on business decisions.”

The report also includes a variety of charts and tables depicting respondents’ answers.


StratX, LLC offers the above commentary for informational purposes only, and does not necessarily agree with all (or any) of the views expressed by these outside parties.

—– is published by StratX, LLC (  StratX, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future business conditions, and given these conditions, offers corporations and businesses advice, strategies, and actionable methods on how to optimally increase revenues and profitability.