Businesses’ Inflation Expectations And Top Concerns For 2016

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 2016 BIE Survey dated January 13, 2016 (involving 220 firms responding):

Respondents indicated that, on average, they expect unit costs to rise 1.8 percent over the next 12 months. Inflation uncertainty declined to 2.1 percent. Firms also report that, compared to this time last year, their unit costs are up 1.4 percent. Respondents’ sales levels, compared to what they consider normal conditions, were unchanged, with approximately 59 percent of respondents indicating current sales levels are at or above normal. Profit margins were also stable, with roughly 52 percent of respondents indicating their profit margins are at or above normal.

This month’s “quarterly question” concerned “Long-term inflation expectations.”  As seen in the survey results:

Over the long term—that is, per year over the next five to 10 years—respondents expect unit costs to increase 2.7 percent, on average, unchanged from the October reading. Respondents’ uncertainty (variance) regarding this expectation declined to 2.1 percent.

This month’s “special question” concerned firms’ biggest concerns for 2016.


RevSD, 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 RevSD, LLC.  RevSD, 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.