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Inflation Project


Business Inflation Expectations
Special Questions Series

In addition to gauging firms' price-setting environment and year-ahead unit cost expectations, the Atlanta Fed uses the survey to investigate issues of longer-term interest for research and policy. Frequently, we will ask a "special question" designed for this purpose. Here is a summary of the special questions and responses from our panel.

December 2012: Number of employees, hours, and effort compared to "normal"

With regard to your workforce, how do the following compare to "normal" times?

  Number of employees Average hours per employee Effort per hour
Greater than normal 9.9% 23.5% 37.4%
About the same as normal 48.8% 59.3% 56.4%
Less than normal 40.9% 16.7% 6.9%
Unsure 0.5% 0.5% 2.0%

November 2012: Year-Ahead Sales Level Expectations

Projecting ahead, to the best of your ability, please assign a percent likelihood to the following changes to sales levels over the next 12 months.

  Sales levels down
(<-1%)
Sales levels about unchanged
(-1% to 1%)
Sales levels up somewhat
(1.1% to 3%)
Sales levels up significantly
(3.1% to 5%)
Sales levels up very significantly
(>5%)
Mean Median Mode Variance
Construction and Real Estate (34) 17% 35% 29% 12% 6% 1.1% 1.1% 1.3% 2.7%
Finance and Insurance (20) 24% 42% 23% 9% 4% 0.5% 0.4% 0.1% 2.8%
General Services (15) 11% 45% 27% 14% 3% 1.0% 1.0% 1.0% 2.5%
Manufacturing (34) 16% 24% 26% 18% 15% 1.8% 1.8% 2.2% 2.9%
Retail & Wholesale Trade (42) 18% 25% 30% 18% 10% 1.5% 1.5% 1.4% 3.2%
Other (52) 12% 32% 33% 15% 8% 1.5% 1.5% 1.3% 2.7%
All Respondents (197) 16% 32% 29% 15% 8% 1.2% 1.2% 1.1% 2.8%

October 2012: Long-term inflation expectations

Projecting ahead, to the best of your ability, please assign a percent likelihood to the following changes to unit costs per year over the next five to 10 years.

  N Unit costs
down (<–1%)
Unit costs
about unchanged
(–1% to 1%)
Unit costs up
somewhat
(1.1% to 3%)
Unit costs up
significantly
(3.1% to 5%)
Unit costs up
very significantly
(>5%)
Mean Median Mode Variance
February 2012 89 4% 11% 38% 29% 17% 2.9% 2.9% 2.9% 2.8%
April 2012 152 4% 12% 36% 30% 18% 3.0% 3.0% 2.9% 2.6%
July 2012 153 4% 15% 36% 26% 19% 2.8% 2.9% 3.0% 2.9%
October 2012 196 4% 13% 36% 30% 17% 2.9% 2.9% 2.9% 2.7%

September 2012: Measuring the sales gap

By roughly what percent are your sales levels above/below "normal"?

Number of
responses
Firm size Average gap
92 Small (1–99 employees) –9.6%
43 Medium (100–499 employees) –9.6%
49 Large (500+ employees) –4.9%
184 Total (weighted by industry share of GDP) –7.6%

August 2012: Gauging firms' perception of pricing power

Survey respondents were randomly assigned one of the following questions.

  Industry Number of
responses
Average Median Mode Variance
What effect would an unanticipated 2 percent rise in unit costs have on your prices? Total 87 1.3% 1.5% 2.0% 0.8%
Retail and wholesale trade 15 1.7% 2.0% 2.5% 1.0%
Manufacturing 18 1.2% 1.3% 1.5% 0.7%
Other 54 1.3% 1.0% 2.0% 0.8%
What effect would an unanticipated 6 percent rise in unit costs have on your prices? Total 82 3.8% 4.0% 3.0% 4.4%
Retail and wholesale trade 14 4.3% 4.0% 4.0% 3.4%
Manufacturing 17 4.1% 4.0% 4.0% 2.8%
Other 51 3.6% 3.5% 0.0% 5.2%

July 2012: Long-term inflation expectations

Projecting ahead, to the best of your ability, please assign a percent likelihood to the following changes to unit costs per year over the next five to 10 years.

  N Unit costs
down (<–1%)
Unit costs
about unchanged
(–1% to 1%)
Unit costs up
somewhat
(1.1% to 3%)
Unit costs up
significantly
(3.1% to 5%)
Unit costs up
very significantly
(>5%)
Mean Median Mode Variance
February 17, 2012 89 4% 11% 38% 29% 17% 2.9% 2.9% 2.9% 2.8%
April 13, 2012 152 4% 12% 36% 30% 18% 3.0% 3.0% 2.9% 2.6%
July 20, 2012 153 4% 15% 36% 26% 19% 2.8% 2.9% 3.0% 2.9%

June 2012: Influences on prices over the last 12 months

Looking back over the LAST 12 months, how do you think the following five common influences have affected the prices of your products and/or services?

  Strong downward influence Moderate downward influence Little/no influence Moderate upward influence Strong upward influence Diffusion Index†
Labor costs 0% 2% 52% 41% 4% 24
Non-labor costs 0% 6% 30% 53% 11% 34
Productivity 1% 14% 67% 18% 1% 2
Margin adjustments 3% 19% 55% 21% 2% 1
Sales levels 4% 20% 45% 27% 4% 4
† The diffusion index is calculated such that each response of strong downward influence is assigned a value of –100, moderate downward influence is assigned a value of –50, little/no influence 0, moderate upward influence 50, and strong upward influence 100. Therefore, a positive index value indicates that overall prices are being influenced upwards, on average, and a negative index value indicates that prices are being influenced downwards, on average.

May 2012: Assessment of "normal" sales levels

Compared to one year ago, how has your estimation of "normal" sales levels changed?

Number of responses Decreased Stayed the same Increased
155 30% 45% 25%

April 2012: Long-term inflation expectations

Projecting ahead, to the best of your ability, please assign a percent likelihood to the following changes to unit costs per year over the next five to 10 years.

Unit costs down (<–1%) Unit costs about unchanged (–1% to 1%) Unit costs up somewhat (1.1% to 3%) Unit costs up significantly (3.1% to 5%) Unit costs up very significantly (>5%) Mean Median Mode Variance
4% 12% 36% 30% 18% 3.0 3.0 2.9 2.6

March 2012: Influences on pricing decisions

ORDINARILY, what level of influence do the following have on your pricing decisions? (1=No influence, 5=Very influential)

  Number of
responses
Labor
costs
Materials
costs
Transportation
costs
Marketing
costs
Demand for
product or service
Inventories Competitive
pressure
Total 150 3.3 3.4 2.9 2.4 3.7 2.4 3.8
Retail & Wholesale Trade 17 3.2 4.1 3.1 2.9 3.4 3.3 4.2
Manufacturing 34 3.2 4.3 3.6 2.1 3.9 2.6 4.0
Other 99 3.4 3.0 2.7 2.4 3.7 2.2 3.6

February 2012: Long-term inflation expectations

Projecting ahead, to the best of your ability, please assign a percent likelihood to the following changes to unit costs per year over the next five to 10 years.

Number of
responses
Unit costs down (<–1%) Unit costs about unchanged (–1% to 1%) Unit costs up somewhat (1.1% to 3%) Unit costs up significantly (3.1% to 5%) Unit costs up very significantly (>5%) Mean Median Mode Variance
89 4% 11% 38% 29% 17% 2.9 2.9 2.9 2.8

Note: Responses to the special question are limited to those that were submitted after 5:30 p.m. Monday, February 13, due to a variation in the question text.


January 2012: How frequently do firms make very small adjustments to their prices?

Out of every 20 price changes you make, roughly how many are adjustments of less than 1 percent?

Number of
responses
0 1-2 3-5 6-10 11-15 16-20 N/A
161 35% 14% 13% 15% 6% 9% 9%

The results were mixed. A significant share (35 percent) of firms indicated that they do not make very small price adjustments. However, for a significant minority of businesses, small price adjustments were common.


Note: Percentages may not add up to 100 percent because of rounding.

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