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Oct. 14, 2021

Cost Pressures Mount Amid Widespread Supply Disruption and Labor Shortages

Three-fourths of U.S. CFOs express difficulty hiring, leading them to increase wages, according to The CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. Most CFOs also indicate in the third-quarter survey that their firms are experiencing supply chain disruptions that are expected to last well into 2022.

When asked whether they are currently experiencing disruptions in their supply chains, three-quarters of firms report disruptions, including production delays, shipping delays, reduced availability of materials, and increased materials prices. Large firms are more likely than small firms to take action to adjust their supply chains, such as holding more inventory, diversifying or reconfiguring supply chains, moving production closer to the U.S., or changing shipping logistics. Small firms note less “room to maneuver” and are more likely to report waiting for supply chain issues to resolve themselves.

For the panel as a whole, only about 10 percent of respondents anticipate these supply chain difficulties will resolve by the end of this year. Most respondents anticipate these issues will not resolve until the second half of 2022 or later.

“The actions that these companies are taking to manage supply chain disruptions are costly and hence increase the pressure on companies to increase prices,” said John Graham, a Fuqua finance professor. “What is more, these supply chain challenges are shaving 5 percent off their revenue growth, on average.”

Firms indicate that hiring difficulties are an even more pressing concern than are supply chain challenges. Seventy-four percent of survey participants report that their companies are having difficulty filling open positions. Among these firms, 82 percent are increasing starting wages – by an average of 9.8 percent – in an attempt to fill these vacancies, and 33 percent are implementing or exploring automation to replace workers.

CFOs continue to anticipate employment and revenue growth. However, CFO optimism for both the U.S. economy and their own firms’ financial prospects has moderated. When asked to rank optimism about the overall U.S. economy on a scale of 0 to 100, the average rating from CFOs was 59.9, down from the 69.0 reading in the second quarter. Firms also expressed moderated optimism for their own firms’ financial prospects, with average optimism at 70.2, down from the second quarter reading of 74.9.

The CFO Survey is issued by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. The latest survey, as well as historical data and commentary, can be found at http://www.cfosurvey.org. Sign up to receive email notifications when new results are posted.


As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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