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Data & Results – Q3 2021

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. 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.

News Release

  • CFO Optimism

    When survey participants were asked between September 20 and October 1 to rate the financial prospects of their firms on a scale from 0 to 100, the average optimism level was 70.2, down from 74.9 in the second quarter. When asked to rate their optimism about the overall U.S. economy, the average index was 59.9, down from a previous reading of 69.0. Both measures fell for the first time since a significant drop in optimism at the onset of the COVID-19 pandemic.

    Please see The CFO Survey Methodology for further information.
  • CFOs' Most Pressing Concerns

    When firms were asked about their most pressing concerns, labor availability remained at the top. Supply chains and demand/sales/revenue were also relatively more of a concern for respondents in the third quarter compared to the second quarter. Cost pressures also remained a top concern among firms, which manifested itself even more in responses to third quarter special questions about supply chains and labor availability.

    Please refer to The CFO Survey Methodology for more information.
  • CFOs’ Expectations for Their Firms’ Performance

    On average, CFOs continue to anticipate revenue to rise notably this year and in 2022. However, expectations for 2021 and 2022 employment growth moderated in the third quarter compared to expectations in the second-quarter survey.

    CFOs’ Growth Expectations for Their Own Firms, by Response QuarterQ3 2021Q2 2021
    Mean (and Median) Expected Year-Over-Year Percentage Change for Calendar Years2021202220212022
    Revenue10.9%
    (9.0%)
    8.7%
    (7.0%)
    9.6%
    (6.5%)
    9.3%
    (6.0%)
    Price7.1%
    (5.0%)
    5.4%
    (3.0%)
    7.9%
    (3.8%)
    5.9%
    (3.0%)
    Employment (full-time)5.6%
    (1.5%)
    4.8%
    (2.8%)
    6.2%
    (3.0%)
    5.9%
    (2.7%)
    Wage Bill6.9%
    (5.0%)
    6.9%
    (4.0%)
    9.6%
    (4.0%)
    8.5%
    (4.0%)
    Non-wage Compensation6.9%
    (5.0%)
    7.9%
    (5.0%)
    6.9%
    (5.0%)
    7.1%
    (5.0%)
    Unit Cost6.7%
    (5.0%)
    5.5%
    (4.0%)
    7.1%
    (4.0%)
    5.7%
    (4.0%)
    Note: Q3 2021 data in the table reflect results for 270 to 290 U.S. firms responding to the Q3 2021 survey (September 20 to October 1, 2021). Results from the Q2 2021 survey (June 21 to July 2, 2021) are shown in the table for comparison (for 296 to 316 firms). See additional notes in the chart above.
    Please refer to The CFO Survey Methodology for more information.
  • CFOs’ Expectations for the Aggregate Economy

    Among survey respondents in the third quarter, the mean expectation for real GDP growth over the next four quarters was 3.2 percent. Respondents expected an average annual return on the S&P 500 of 6.2 percent over the next 12 months and 9.4 percent over the next 10 years.

    Expectations for Real GDP Growth Over Next Four Quarters, by Response Quarter
    Q3 2021
    (N=260)
    Q2 2021
    (N=285)
    Weighted Mean3.2%4.9%
    Weighted Median3.2%5.0%
    Probability of Negative Growth
    (mean share of probability on bins below zero)
    8.2%3.0%
    Note: Responses are weighted by sales revenue. See additional notes in the chart above.
    Expectations for Stock Market Performance, by Response QuarterQ3 2021Q2 2021
    Expected Annual S&P 500 Returns Over Next 12 Months and Next 10 Years12 Mos
    (N=198)
    10 Yrs
    (N=204)
    12 Mos
    (N=216)
    10 Yrs
    (N=220)
    Worst Case (a 1-in-10 chance the actual return will be less than):-2.5%3.2%-2.5%2.6%
    Most Likely Case6.2%9.4%6.8%8.1%
    Best Case (a 1-in-10 chance the actual return will be greater than):11.4%14.0%12.4%12.6%

    Note: The table shows responses from firms that indicated they closely follow the stock market. Responses are unweighted and winsorized at 2.5% and 97.5% to remove the potential influence of extreme values.

    Please refer to The CFO Survey Methodology for more information.

  • Semiannual Questions on Investment

    The third quarter CFO Survey included a semiannual investment module to ask participants about their recent structures and equipment investment decisions. Only about one-third of firms anticipate investing in structures over the next six months. Nearly two-thirds of firms anticipate spending on equipment in the near-term. The majority of firms not intending to invest in either equipment or structures over the next six months cite adequate or excess capacity as the reason.

    Please refer to The CFO Survey Methodology for more information.

  • Special Questions on Supply Chains

    The third quarter survey included special questions on whether firms were experiencing disruptions to their supply chains.

    Three-quarters of firms reported disruptions, including production delays, shipping delays, reduced availability of materials, and increased materials prices.

    Large firms are more likely to be taking 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 noted less “room to maneuver” and were more likely to report waiting for supply chain issues to resolve themselves.

    Less than 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.

    Among firms with disruptions that have caused lost/delayed sales, their revenue has been reduced by 5 percent, on average.

    By roughly what percentage have these supply chain disruptions reduced your gross revenue in 2021?
    Percentage Reduction in Revenue for Firms with Lost and/or Delayed SalesTotal
    (N=137)
    Large Firms
    (N=28)
    Small Firms
    (N=106)
    Weighted Mean5.1%4.2%7.1%
    Weighted Median3.0%3.0%5.0%
    Note: Responses are weighted by sales revenue. Firms that responded “No” to the question about lost or delayed sales were not presented with this question.
  • Special Questions on Labor Availability

    The third quarter survey included special questions on the availability of workers. 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 10 percent) in an attempt to fill these vacancies, and 33 percent are implementing or exploring automation to replace workers.

    By roughly what percentage, on average, have you raised wage/salary offerings for those open positions you’re having difficulty filling?
    Percentage Increase in Wages Among Firms Raising WagesTotal
    (N=175)
    Routine/
    Manual/
    Nonspecialized

    (N=38)
    Nonroutine/
    Creative/
    Specialized

    (N=50)
    All Job Types
    (N=87)
    Weighted Mean9.8%12.6%9.3%9.1%
    Weighted Median10.0%10.0%10.0%10.0%
    Note: Responses are weighted by employment. Firms that indicated they are increasing wage/salary offers were presented with this question.

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