Companies will soon start reporting their latest quarterly financial results and investors have been warned that inflation is going to sting.
Retailers, auto makers and a wide range of manufacturers have all warned investors that a supply chain crunch and higher raw materials costs are adding to expenses and hurting profits. A COVID-19 resurgence during the third quarter threw many industries off-balance just as they were regaining their footing from the pandemic slump.
Many companies were able to pass off higher costs to consumers during the first half of the year without much fuss as the economy roared back from the pandemic. But consumer spending, which is key to the economic recovery, slowed a bit over the summer as COVID-19 cases spiked. Still, demand stayed strong for many products, but companies simply didn’t have the supply and that stunted sales growth for many.
“We do think the consumer can absorb some of those higher prices, the challenge is what happens when a company doesn’t have the supply to sell,” said Jay Pestrichelli, CEO of investment firm ZEGA Financial.