“Overall, CFOs remain optimistic about the U.S. economy and their own company’s prospects,” said Sonya Ravindranath Waddell, vice president and economist with the Richmond Fed. “Where there are challenges, they are most pronounced for small or financially constrained firms.” View the full results >
Are Firms Financially Constrained?
Since 2020, U.S. firms have faced two sources of pressure on their finances. The first is cost-driven: The global pandemic’s upending of supply chains, successive rounds of tariff policy changes, and conflict-driven increases in oil prices all pushed input costs higher. The second is from credit conditions. Elevated inflation prompted the sharpest monetary tightening cycle since the 1980s. And, despite some easing on the short end of the curve, benchmark 10- and 30-year borrowing rates recently touched their highest levels in nearly 20 years, suggesting that costs of financing have moved even higher over the past six months. Together, these pressures raise a central question: Are firms meaningfully financially constrained? Read more in Research & Commentary >
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