Atlanta Fed Survey Shows Business Cost Expectations Fall to 2.3% in October

Key Facts

Expectations for unit cost growth among businesses participating in the Federal Reserve Bank of Atlanta's survey fell to 2.3% in October 2026, according to an update published by the bank on October 21, ahead of the U.S. monetary policy meeting. In September, businesses had expected unit costs to rise by 2.4% over the following year, a reading the bank described at the time as an increase in their expectations. The move to the October reading thus reflects a decline in the rate of cost growth businesses anticipate, following the increase recorded the previous month. Expectations remain below their historical peak of 3.8%, recorded by the survey in April 2022, according to the bank's September report. This trend concerns businesses' estimates of future costs within their own operations, at a time when U.S. price indicators span business expectations and the actual increases consumers pay.

The Atlanta survey covers businesses in the Federal Reserve's Sixth District and asks for their estimates of unit cost growth within the responding firm over the coming period, according to the bank's definition of the survey. The bank describes the target variable as "future growth in unit costs within the firm," placing the expectations in the context of operating costs at participating businesses. Alongside these estimates, the survey collects qualitative information each month on businesses' sales levels and margins to set cost expectations against the business conditions they face. Over the longer term, the September report showed expected unit cost growth over a horizon of 5 to 10 years at 2.8%. The bank said these longer-term expectations were unchanged from June 2026, while expectations for the following year had risen in the same September report.

On prices paid by consumers, the headline U.S. consumer price index rose 3.7% year-on-year in September, according to the U.S. Bureau of Labor Statistics. That increase covered the index's movement over the year ended September 2026, compared with the forward-looking horizon addressed by business cost expectations in the Atlanta survey. The gasoline price index jumped 9.1% during September, according to the same Bureau of Labor Statistics release. The gasoline increase reflects the change during the month, while the headline index reading measures the year-on-year rise in consumer prices. The decline in business cost expectations in October followed these increases recorded in September, with each indicator covering a different time frame and type of price or cost.

Against the backdrop of economic activity, the Federal Reserve Bank of Atlanta lowered its nowcast for third-quarter real gross domestic product growth to 3.5% in its October 20 update. The model had estimated growth at 3.6% in its October 15 update before lowering the reading in the latest update. The estimate represents a seasonally adjusted annualized growth rate for the U.S. economy during the third quarter, according to the bank. In the labor market, the U.S. Labor Department said in its release dated October 15, 2026, that the four-week moving average of unemployment benefit claims stood at 198,500. The average rose by 250 claims from the previous week, adding the movement in benefit claims to the growth and price backdrop surrounding the release of the business cost expectations survey.

In interest rate pricing ahead of the October survey's release, Reuters reported during September that traders had raised the probability they assigned to a rate increase at the October meeting. That probability stood at 56% at the time of the report, according to CME Group's interest rate expectations tracking tool cited by the news agency. The comparable figure a week before that report was 43.5%, reflecting a shift at the time in traders' assessments of the next meeting's decision. This market comparison dates to September 2026, before the business cost expectations update published by the Atlanta Fed in October. The Federal Open Market Committee, which sets monetary policy, meets on October 27 and 28, 2026, according to the Federal Reserve Board's official calendar.

The next scheduled events on the Atlanta Fed's calendar begin with an update to its GDP nowcasting model on Tuesday, October 27, according to the date announced by the bank. The growth update comes on the opening day of the Federal Open Market Committee meeting, which runs through October 28, according to the Federal Reserve's calendar. After the meeting, the October consumer price index is due for release on November 10, 2026, according to the U.S. Bureau of Labor Statistics. The next release of the Atlanta Fed's Business Inflation Expectations survey is scheduled for November 18, according to the survey's official page. The growth estimate update, monetary policy meeting and consumer price release thus follow in sequence before businesses participating in the Atlanta survey return to the spotlight with the publication of their next unit cost expectations.