Inflation Expectations Of Firms

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 April 2016 BIE Survey dated April 13, 2016 (involving 202 firms responding):

Respondents indicated that, on average, they expect unit costs to rise 1.7 percent over the next 12 months. Inflation uncertainty was virtually unchanged at 2.3 percent. Firms also report that, compared to this time last year, their unit costs are up 1.2 percent. Respondents’ sales levels, compared to what they consider normal conditions, improved overall to a diffusion index value of minus 8 compared to minus 13 in March. Profit margins also improved, with a diffusion index value of minus 16 compared to minus 19 in March.

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 slightly from the January reading. Respondents’ uncertainty (variance) regarding this expectation increased to 2.2 percent.

This month’s “special question” had to do with the firms’ assessments of inventory levels and their impact.

The report also includes 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.