Firms’ Year-Ahead Inflation And Labor Cost Forecasts

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, pricing, 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 May 2023 BIE Survey dated May 10, 2023 (involving 185 firms responding):

  • Inflation expectations: Firms’ year-ahead inflation expectations remain relatively unchanged at 2.9 percent, on average.
  • Current economic environment: Sales levels “compared to normal” decreased. However, firms’ profit margins “compared to normal” increased. Year-over-year unit cost growth remained relatively unchanged at 3.5 percent, on average.
  • Quarterly question: Approximately 75 percent of firms expect both labor and nonlabor costs to place upward influence on prices. About 53 percent of firms expect sales levels to exert little or no influence on prices over the next 12 months. Approximately 50 percent of firms expect margin adjustment to have little or no influence on prices over the next 12 months.
  • Special question: Firms were asked about their shares of low-skilled and high-skilled employees. They were also asked about their expected percentage change in their hourly average wage. A breakdown of the results can be found in the special question section below.

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


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.