The Economy

Labor Shortages Weighed on CFOs in Q2

More than a third of firms expect worker shortages will reduce revenue potential this year, according to The CFO Survey.
Matthew HellerJuly 16, 2021
Labor Shortages Weighed on CFOs in Q2

CFOs continue to be optimistic about the U.S. economy despite concerns over labor availability and rising costs, according to The CFO Survey.

The report, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta (formerly known as the Duke/CFO Global Business Outlook Survey), found CFOs’ average optimism for the financial prospects of their firms was 74.9 on a scale of 0 to 100 in the second quarter.

When respondents were asked to rate their optimism about the overall U.S. economy, the average rating was 69.0.

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Both readings were slightly above the fourth quarter’s 73.2 and 67.7, respectively.

The survey also found, however, that labor availability is now the most pressing concern for firms, with more than 75% reporting difficulties filling open positions. Of those, more than half said the worker shortage had reduced revenue.

“CFOs expect revenue and employment to rise notably through the rest of 2021,” said Sonya Ravindranath Waddell, vice president and economist at the Federal Reserve Bank of Richmond. “Nonetheless, well over a third of firms anticipated worker shortages to reduce revenue potential in the year.”

“With so many firms unable to find the employees or inputs to meet the demand for their products and services, it is not surprising that respondents anticipated both cost and price increases,” she added.

Approximately 80% of respondents reported larger than normal cost increases that are anticipated to last for many months. Much, though not all, of this increase is expected to translate into price increases.

“The CFO Survey results suggest that labor shortages have burdened firms significantly,” the report said.