Fed survey: Companies are absorbing higher oil costs, but fears of inflation continue to rise

Key Points:

• A survey of 530 financial executives revealed growing distrust in the broader U.S. economy despite confidence in their own companies, with inflation becoming a top concern for 25% of firms in Q2 2026, up from 9.5% last quarter.
• Two-thirds of companies experienced increased production costs due to energy price shocks, but only one-third passed these costs to consumers; however, sustained high energy prices could force firms to raise prices significantly.
• The Federal Reserve's annual household survey showed stable personal financial wellbeing, with 73% of Americans feeling financially comfortable in 2025, yet only 25% viewed the national economy positively, continuing a post-pandemic trend of economic pessimism.
• Despite a recent U.S.-Iran memorandum aiming to end the conflict and reopen the Strait of Hormuz, oil supply disruptions persist due to mine clearing and altered trade routes, keeping energy prices elevated above pre-war levels.
• Elevated inflation above 4%, driven by tariffs, energy shocks, and rising labor, transportation, and healthcare costs, poses challenges for the Federal Reserve’s inflation targets, with officials noting that inflation in services remains particularly persistent.