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Chief financial officers (CFOs) across U.S. companies said they\u2019ve been able to navigate the challenges of increased energy costs as a result of the closure of the Strait of Hormuz, but that\u2019s done little to assuage their anxieties around future inflation, according to new Fed data.<\/p>\n
A survey published on Wednesday by the Federal Reserve Banks of Richmond and Atlanta and Duke University\u2019s Fuqua School of Business surveying 530 financial executives found a growing disparity between CFOs\u2019 trust in their own companies versus the economy more broadly as the war in Iran ostensibly concludes. Executives reported being able to absorb increased costs, but feel more pessimistic about rising prices more broadly. While two-thirds of companies saw increased production costs last quarter as a result of energy price shocks, only one-third passed those increases to consumers. However, inflation was a growing worry, with 25% of firms naming it as their most pressing concern in second-quarter 2026, up from 9.5% last quarter. CFOs slashed U.S. economic growth projections from 2.1% last quarter to 1.8% this quarter.<\/p>\n
The pattern of a widening gap between one\u2019s personal financial health and the broader economic health extends beyond the C-suite. The Federal Reserve\u2019s annual Survey of Household Economics and Decisionmaking released last month found Americans\u2019 overall financial wellbeing has held steady for years, with 73% of survey respondents saying they were doing OK or lived comfortably in 2025, compared to 75% in 2024. However, only 25% saw the national economy as \u201cgood\u201d or \u201cexcellent,\u201d mirroring 2024\u2019s 28%, but falling far below the pre-pandemic 49%.\u00a0<\/p>\n
But with energy costs likely to persist above prewar norms, Atlanta Fed economist Brent Meyer suggested companies\u2019 concerns about the economy may catch up to their own bottom lines. He noted that while pass-through rates have remained low now, if oil prices continue to rise or remain elevated, pass-through would skyrocket to about 90%.<\/p>\n
\u201cThis suggests that in an environment of sustained higher cost pressures, firms may be unwilling or unable to absorb any more costs,\u201d he said in a statement.<\/p>\n
Though the U.S. and Iran signed a long-awaited \u201cmemorandum of understanding\u201d earlier this month that set the state for a final settlement of the war, significant question marks loom about the aftershocks of this conflict, should it indeed come to an end. The Strait of Hormuz, through which 20% of the world\u2019s oil previously was traded, was technically reopened following the interim deal, but the main central route of the trade corridor remains mined and closed, and traffic remains significantly below pre-war levels. According to data from shipping analytics company Kpler, 35 ships traveled through the strait last Saturday, compared to the 100 to 10 vessels in late February.<\/p>\n
While oil prices have dropped to around $74 a barrel\u2014far below the peak of around $115 a barrel in April\u2014experts warn prices will continue to be elevated above pre-war levels as a result of complications surrounding the Strait of Hormuz and previous patterns of energy costs, which follow the \u201crocket and feathers\u201d effect of rising quickly, but falling slowly.<\/p>\n
Restricted oil supply has depleted strategic oil reserves to the lowest levels in decades, and the Strait of Hormuz will likely take months to return to prewar traffic as a result of mine-clearing efforts, increase congestion, as well as oil and natural gas flows that altered over the source of the conflict as countries adapted their supply chains to the strait\u2019s closure. The U.S. Energy Information Administration projects oil prices to level off at their still-elevated levels rather than fall to prewar norms.<\/p>\n
These increased energy costs spell bad news for Fed economists and new Fed Chairman Kevin Warsh, who has taken a hawkish stance and vowed to target inflation, which has remained above 4%, compared to the Fed\u2019s 2% target.<\/p>\n
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, told Marketplace<\/em> this week that the U.S. has slipped backwards recently in its fight against inflation as a result of tariffs and energy shocks. While a more permanent deal with Iran would be a step in the right direction to combat rising prices, the U.S. still has to contend with rising labor costs, as well as transportation and healthcare costs keeping inflation high.<\/p>\n \u201cWe\u2019ve been dealing with an inflation problem that\u2019s well above the target and has been going the wrong way,\u201d he said. \u201cThere are some signs, like the fact that some of the inflation came from tariffs, and that\u2019s supposed to be one and done, that we could get some resolution in the Middle East, and maybe that inflation would go away. Those parts are good. The fact that we\u2019ve seen it in services, which historically is pretty persistent, is a little more disturbing.\u201d<\/p>\n<\/div>\n #Fed #survey #Companies #absorbing #higher #oil #costs #fears #inflation #continue #rise<\/p>\n","protected":false},"excerpt":{"rendered":" Chief financial officers (CFOs) across U.S. companies said they\u2019ve been able to navigate the challenges of increased energy costs as a result of the closure of the Strait of Hormuz,… <\/p>\n","protected":false},"author":1,"featured_media":9170,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[11219,9215,1292,2472,449,2138,3083,618,674,613,176,445,280,70,6227],"class_list":["post-9169","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-news","tag-absorbing","tag-chief-financial-officer-cfo","tag-companies","tag-continue","tag-costs","tag-crude-oil-prices","tag-energy-prices","tag-fears","tag-fed","tag-higher","tag-inflation","tag-iran","tag-oil","tag-rise","tag-survey"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9169","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9169"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9169\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/9170"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}