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U.S. Labor Shortages, Price Pressures to Continue Until Next Year

Don’t expect those labor constraints to go away any time soon.

At least that’s according to a survey of business economists out Monday, in which only 6% of respondents expect U.S. labor shortages to abate by the end of 2021. Nearly a third of panelists said they didn’t know, indicating elevated uncertainty.

When paired with lingering supply chain challenges, the National Association for Business Economics report suggests inflationary pressures persisting for the foreseeable future.

Nearly four in 10 panelists said their firms are experiencing a worker shortage, noting challenges ranging from not enough applicants to plenty of applicants but not enough matches. As a result, more than half of the respondents expect wage costs to increase over the next three months.

Half of the panelists also expect materials costs to rise over the next three months. In many cases, consumers will feel the direct impact of those increases. Forty-three percent said they expect their firms to raise prices in the next three months.

Despite these shortages though, 61% of panelists said their firms’ sales volumes have already returned to pre-pandemic levels. Another 14% expect a full recovery in sales volumes sometime this year.

The survey of 93 NABE members was conducted July 6-15.

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