CFOs are starting to feel the weight of economic troubles, according to a recent survey by Duke University and the Federal Reserve Banks of Richmond and Atlanta. Although confidence in the economy as a whole rose slightly, financial executives across the board are dealing with an abundance of issues that are stalling plans for growth.

The share of firms with abnormally large increases in the majority of their costs doubled since the second quarter of last year, from 26% to more than 52%, said Atlanta Fed economist Brent Meyer. More than 80% of firms expect cost pressures to persist into next year, and around a third expect these pressures to last longer than a year. It’s not surprising to see real GDP growth expectations decrease in a time of heightened uncertainty when supply issues are persistent.

As inflation is forcing companies to increase resource allocation just to maintain services, rapid growth is turning into a pipedream for companies who are already operating with tight margins. More than half (55%) of respondents said their spending increased in the last 90 days. Yet despite having to spend more to maintain status-quo, over two-thirds (68%) of CFOs expressed optimism in their own company’s future.

Data shows more than half (53%) of financial executives reported having an abnormally large increase in a majority of their costs, an indication that companies are spending more to get the same results. Only 37% of CFOs reported abnormal increases in a majority of their costs In Q4 of 2021.

While the rising costs are impacting goods producers who rely on raw materials and long supply chains, it is the service providers that are feeling the impact of a limited labor pool on top of inflation-induced woes. Seemingly regardless of industry, survey respondents shared that filling skills-based jobs is still a task that just keeps getting harder as the year goes on.

More than half (58%) of respondents told surveyors that it was harder to find skilled employees now than at the beginning of the year. Only 7% of financial decision-makers said hiring skilled employees got easier. As workers are demanding benefits including flexible working conditions, balances between work and leisure, and higher compensation packages, finance teams across the board face myriad challenges to hire the right people.

CFOs identified in the survey said they plan on continuing efforts to attract talent despite concerns about labor quality and availability. Roughly one-fourth of respondents xpect hiring to continue to be a struggle by the end of 2022, compared to only one-tenth of respondents who expect hiring to become easier.

As inflation rises and the quality of labor pools falls, financial executives must develop strategies, not only to juggle the external economic elements bearing down on their companies, but to remain proactive in efforts to sustain growth. A financial executive with experience in both M&A and FP&A should be up for the challenge.

The Q3 CFO Survey was conducted from August 24 to September 9, 2022.