Optimism about the U.S. economy's recovery from the coronavirus pandemic is fading as the turnaround faces mounting headwinds from both a labor shortage and supply chain disruptions, according to a survey of American CFOs.
The CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, shows that finance chiefs' optimism about the economy and their own firms' financial prospects has moderated.
That's in part because a majority of CFOs are coping with dual crises – a lack of available workers and a global supply chain crisis – that are forcing them to take on more costs.
Most CFOs (75%) said their firms are grappling with pandemic-induced problems in the supply chain, which has exacerbated wild swings in an array of consumer prices. Businesses are suddenly coping with production delays, shipping delays, reduced availability of materials and increased materials prices.
Large firms were more likely than small firms to take action to deal with the matter, 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 are more likely to report waiting for supply chain issues to resolve themselves, the survey shows.
Just 10% of survey respondents said they expect the supply chain difficulties to ease by the end of the year.
"The actions that these companies are taking to manage supply chain disruptions are costly and hence increase the pressure on companies to increase prices," John Graham, a Duke finance professor, said in a statement. "What is more, these supply chain challenges are shaving 5% off their revenue growth, on average."
But CFOs said that hiring troubles posed an even bigger threat than supply chain challenges: Three-fourths of survey respondents said they are struggling to fill open positions; as a result, nearly 82% have started to increase wages, by an average of nearly 10%. The other 33% is implementing or exploring automation to replace workers.
The survey comes after a new Labor Department report released on Tuesday revealed there were an estimated 10.4 million open jobs at the end of August. Though a slight decline from the end of July, it's still a staggeringly high figure; there are some 2.7 million more open jobs than unemployed Americans looking for work.
The number was exacerbated by a record 4.3 million people who quit their jobs in August, representing about 2.9% of the country's workforce, according to the Job Openings and Labor Turnover Survey (JOLTS) report. The report was released just a few days after the government's September jobs report, which revealed payroll increased by just 194,000 last month, well below the 500,000 expected by Refinitiv economists.
"The workforce shortage is the single most significant threat to America’s economic recovery," the powerful U.S. Chamber of Commerce said in a statement Tuesday morning. "Coupled with Friday's disappointing employment figures, this is yet another reminder that the recovery remains very fragile."