The March Atlanta Fed Business Inflation Expectation survey mean was up two-tenths to 1.9%, reversing the decline to 1.7% in February and back in line with the Fed’s 2% symmetric inflation objective. The mild increase is good news for the FOMC which has enough to deal with in guiding monetary policy through the disruptions created by the spread of COVID-19 and increased risks to the economic outlook as well as financial market volatility.
The survey included a special question. It was, “What effect, if any, has the recent outbreak of the coronavirus had on each of the following components of your business thus far?” By and large, the impact was small to date with most saying “no effect”. The categories were: availability of materials/inputs (~74%), ability to produce goods (~86%), prices you pay for materials/inputs (~81%), your selling prices (~85%), your sales to foreign customers (!76%), your sales to domestic customers (~75%), net effect on your bottom line (~70%).
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