Fed survey finds inflation worry jumps to 25% of firms, not 9.5%

CFO optimism didn’t just fade. It fractured. In a Fed survey of 530 financial executives, the share of firms naming inflation as their most pressing concern surged to 25% for second-quarter 2026, up from 9.5% last quarter.

The jump is happening even though many companies say they managed the immediate energy hit. According to the same survey published by the Federal Reserve Banks of Richmond and Atlanta and Duke University’s Fuqua School of Business, two-thirds of companies saw increased production costs last quarter due to energy price shocks tied to the closure of the Strait of Hormuz, but only one-third passed those increases to consumers. In other words: firms found ways to absorb higher costs, but their confidence in the broader inflation outlook is deteriorating.

This is less “business as usual” than “the mismatch is widening.” The survey points to a growing disparity between CFOs’ trust in their own companies versus the economy more broadly as the war in Iran ostensibly comes toward an end. That matters because most corporate planning is built on one big bet: that today’s cost pressure won’t morph into tomorrow’s pricing power problem.

And the pricing-power part is where things get uncomfortable. Inflation isn’t just “a macro worry” in the abstract. Atlanta Fed economist Brent Meyer, cited in the report, highlights a potential ceiling on corporate absorption. He notes that pass-through rates have remained low so far. But if oil prices keep rising or remain elevated, pass-through could “skyrocket to about 90%.” The implication is simple and brutal for boards: in an environment of sustained higher cost pressures, firms may become unwilling or unable to absorb additional costs.

This is also where the corporate story connects to household reality. The Federal Reserve’s annual Survey of Household Economics and Decisionmaking, released last month, found Americans’ overall financial wellbeing has held steady for years. In 2025, 73% of respondents said they were doing OK or lived comfortably, compared with 75% in 2024. But when asked about the national economy, only 25% called it “good” or “excellent” in 2025, matching 2024’s 28%. That’s far below the 49% seen pre-pandemic. If consumers feel worse about the economy while companies feel worse about inflation, the squeeze shows up twice: demand softens, but costs stay sticky.

Now zoom out to why the oil shock isn’t acting like a one-time event. Even with oil prices reportedly down to around $74 a barrel, far below the April peak of around $115 a barrel, experts warn prices are likely to remain elevated above prewar norms. The reason is the “rocket and feathers” pattern: costs can rise quickly, then fall slowly. The Strait of Hormuz is the center of that dynamic. Twenty percent of the world’s oil previously was traded through it, and the corridor is still not fully normalized.

The source says the strait was technically reopened after the interim deal, but the main central route remains mined and closed. Traffic is still well below pre-war levels. Shipping analytics company Kpler reports 35 ships traveled through the strait last Saturday, compared to roughly 100 vessels to 10 vessels in late February. That operational lag has second-order effects: mine-clearing takes time, congestion increases, and oil and natural gas flows shifted during the closure as countries adapted their supply chains. The U.S. Energy Information Administration projects oil prices will level off at elevated levels rather than return to prewar norms.

If you’re a CFO, that’s the scenario you plan for: not just “higher energy costs,” but potentially persistent higher costs that eventually force pass-through. It also frames why Fed leadership is watching inflation so closely. The source ties these pressures to concerns for Fed economists and new Fed Chairman Kevin Warsh. Warsh has taken a hawkish stance and vowed to target inflation, which has remained above 4% compared to the Fed’s 2% target. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, told Marketplace this week that the U.S. has slipped backwards in its fight against inflation due to tariffs and energy shocks.

Goolsbee also flagged an important distinction: some inflation sources are more “one and done.” Tariffs, he said, are supposed to be that way, and resolution in the Middle East might help inflation fade. But he warned that seeing inflation in services, which has historically been more persistent, is more disturbing. That warning lands directly on the corporate side because service-sector pricing is exactly where costs become harder to reverse and easier to transmit.

So what’s the real stake for executives and boards? The Fed data suggests firms can manage shocks temporarily, but the market is less forgiving if the shock becomes a baseline. When inflation worry rises while pass-through remains low, it often means management is buying time by absorbing margin. If oil stays elevated, Meyer’s “pass-through skyrocket to about 90%” point is the nightmare fuel: the moment costs can no longer be absorbed, pricing moves, and demand can react.

Peers should read this as a planning prompt: the next inflation episode may not be about surviving the spike. It may be about surviving the second round, when the pass-through playbook stops working and the economy starts to look like the inflation chart.