New Survey of Firms' Expectations

Project Outcomes Statement

Our NSF grant was meant to support the design and implementation of a new survey of U.S. firms' inflation expectations and perceptions. This is precisely the outcome of the grant. We have created a new ongoing nationally representative quarterly survey of U.S. firms' inflation expectations that is available and accessible to researchers, policy-makers and the public alike. Results of this survey have been described in several research papers and are publicly available on a website that describes the survey and its results. The survey will be continued by the Federal Reserve Bank of Cleveland upon termination of the grant, thereby ensuring that a long time series will ultimately be available to researchers.

This survey has already had a number of useful results. For example, it has made clear that the inflation expectations of U.S. firms should not be assumed to mimic those of households or professional forecasters as has commonly been done: the dynamics of firms' inflation expectations are unique and distinct from those of other economic agents. Another result has been the striking increase in firms' inflation expectations in 2021 as the pandemic slowdown has faded and price pressures have increased. Since firms' inflation expectations are central to their pricing decisions, the ability to measure and track these expectations during this "inflation scare" provides another illustration of the usefulness of the survey.