As the U.S. recovery gains strength, financial sector firms are increasingly turning their attention to the threat posed by inflation, according to the latest survey of industry economists.

Industry trade group the U.S. Securities Industry and Financial Markets Association (SIFMA) released the results of its latest biannual survey of the chief U.S. economists from 27 financial institutions, highlighting growing attention on price pressures.

“Following the anniversary of the peak of the global pandemic, focus has turned from a normalization of GDP and improving unemployment to inflation,” SIFMA reported, noting that inflation has been on the rise as vaccines are rolled out and the economy reopens.

Headline consumer inflation jumped to 4.2% in April, and core inflation (minus food and energy) was up 3%.

“As the economy recalibrates to a new post-pandemic equilibrium, we can expect to see at least temporary higher prices across multiple segments in inflation indexes, but the real question is whether inflationary pressures will prove temporary or underlying,” said Dr. Lindsey Piegza, chair of SIFMA’s economic advisory roundtable and chief economist at Stifel Financial Corp., in a release.

“For the foreseeable future, this unknown will be the focus both for the market and policy-makers,” Piegza said.

Amid the focus on inflation, SIFMA said that 87% of respondents “view stagflation, as opposed to hyperinflation or deflation, as the bigger risk to the economy.” Stagflation is when slow economic growth is accompanied by high inflation and high unemployment.

The median GDP forecast in SIFMA’s survey was for 7.5% growth in 2021 and 3.1% in 2022.

Economists see the top risks to these forecasts as “additional fiscal stimulus, faster opening of U.S. economy, and larger consumer spending” on the upside, with downside risks including lingering Covid-19 restrictions and lockdowns, labour supply constraints and higher inflation.

The majority of respondents (69%) don’t expect employees to return to their offices at pre-Covid levels.

Among those who do, 13% expect it to happen in the first half of 2022, while another 13% said it will be in the second half of 2022.

“The key factors listed by respondents limiting a large-scale return to office include lack of child care and closed schools, employees choosing to work at home, and lingering health concerns,” SIFMA said.

Most economists (68%) expect the U.S. Federal Reserve Board to start lifting its target range for the federal funds rate in 2023, with 21% expecting it to take longer.