U.S. companies swallowed the oil shock. They’re not sure they can do it again

The ongoing war in Iran has left a lasting impact on the global economy, with U.S. companies struggling to absorb the increased energy costs. A recent survey by the Federal Reserve Banks of Richmond and Atlanta, in collaboration with Duke University's Fuqua School of Business, reveals that chief financial officers (CFOs) across the country have been able to navigate the challenges, but their anxieties about future inflation remain high. The survey, which polled 530 financial executives, highlights a growing disparity between CFOs' trust in their own companies and the economy more broadly.

Background & Context

The Strait of Hormuz, a critical waterway through which 20% of the world's oil was traded, was closed due to the ongoing conflict between the U.S. and Iran. The closure led to a significant increase in energy costs, which in turn affected production costs for U.S. companies. However, the recent interim deal between the two countries has seen the Strait reopen, albeit with reduced traffic.

The impact of the oil shock on U.S. companies has been a cause for concern, with many CFOs worried about the long-term effects on their bottom lines. The survey reveals that while two-thirds of companies saw increased production costs last quarter as a result of energy price shocks, only one-third passed those increases to consumers. This suggests that companies are struggling to absorb the costs, and their ability to do so may be limited.

Key Details

The survey found that inflation was a growing worry for U.S. companies, with 25% of firms naming it as their most pressing concern in the second quarter of 2026, up from 9.5% last quarter. CFOs also slashed their projections for U.S. economic growth from 2.1% last quarter to 1.8% this quarter. The pattern of a widening gap between one's personal financial health and the broader economic health extends beyond the C-suite, with Americans' overall financial wellbeing holding steady for years.

However, only 25% of survey respondents saw the national economy as "good" or "excellent," mirroring 2024's 28%, but falling far below the pre-pandemic 49%. This suggests that Americans are increasingly pessimistic about the state of the economy, despite their own financial wellbeing holding steady.

What Experts Say

Atlanta Fed economist Brent Meyer noted that while pass-through rates have remained low, if oil prices continue to rise or remain elevated, pass-through would skyrocket to about 90%. This suggests that in an environment of sustained higher cost pressures, firms may be unwilling or unable to absorb any more costs. Meyer's comments highlight the potential risks facing U.S. companies, as they struggle to navigate the ongoing energy crisis.

Key Takeaways

• 25% of U.S. companies see inflation as their most pressing concern in the second quarter of 2026.
• CFOs have slashed their projections for U.S. economic growth from 2.1% last quarter to 1.8% this quarter.
• Only one-third of companies passed increased production costs to consumers last quarter.
• Americans' overall financial wellbeing has held steady for years, but their pessimism about the national economy has increased.

What This Means For You

The ongoing energy crisis has significant implications for U.S. companies and consumers alike. As companies struggle to absorb the increased costs, they may be forced to pass them on to consumers, leading to higher prices and reduced purchasing power. For consumers, this means being prepared for potential price increases and adjusting budgets accordingly.

In light of the survey's findings, it's essential for individuals and businesses to stay informed about the ongoing energy crisis and its potential impacts. By staying ahead of the curve, you can make informed decisions about your finances and navigate the challenges ahead.