Labor Availability and Inflation Continue to Concern CEOs; Virginia Economic Outlook Index Trending Slightly Downward

January 27, 2023

UNIVERSITY OF RICHMOND ─ Ninety-six percent of CEOs identified either labor availability or inflation negatively impacting their business at this time, with supply chain issues a distant third area of concern. That’s the latest from the quarterly CEO Economic Outlook Survey conducted by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs.

Almost 53% of CEOs expect sales to increase, with 25% expecting at least a 10% increase, while 41% expect employment to increase over the next six months.

The survey found expectations over the next six months for sales and employment were somewhat positive although expectations were generally down compared to each of the last three quarters. Expectations concerning capital spending remained primarily flat.

More than half (53%) of CEOs indicated that they expect sales to increase over the next six months.

  • 6% expected sales to be “significantly higher.”
  • 47% expected sales to be “higher.”
  • 25% expected sales to be “lower.”
  • 22% indicated they expected no change.

About 29% of CEOs expect capital spending to increase over the next six months (up slightly from last quarter), while 24% expect capital spending to decrease. More than 47% expect capital spending to remain flat. 

More than 41% of respondent CEOs expect employment to increase over the next six months. Additionally, 49% expect employment to remain flat, while only 11% expect employment to fall. 

Taken as a whole, the results about sales, capital spending, and employment are less favorable than the prior three quarters, with the overall Economic Outlook Index decreasing somewhat (71.6 versus 73.4) relative to the results from the end of Q3 2022. 

Additionally, CEOs ranked the degree to which labor availability, supply chain issues, and inflation have negatively impacted their business. They reported the following:

  • Labor availability had the most negative impact: 49%
  • Inflation had the most negative impact: 47%
  • Supply chain issues had the most negative impact: 4%

“The survey results suggest that CEOs see a bit of a leveling out of expectations in terms of growth over the next six months as well as ongoing concerns about labor and inflation,” said Rich Boulger, associate dean at the Robins School, who administers the survey and collects the responses. “The overall index is down slightly.”

“Workforce challenges on top of inflation are keeping optimism down among our CEOs. That said, most of the business owners I talk with don’t foresee a hard recession, but a short, shallow slowdown forced by Fed policy,” said Scot McRoberts, executive director of VACEOs.

For additional information about the CEO Economic Outlook Survey and a specific breakdown of the data, click here.