Optimism about U.S. Economy Drops, AICPA Survey Finds

The percentage of business executives who are optimistic about the U.S. economy going forward dipped below 50% for the first time since early 2014, according to the third quarter AICPA Economic Outlook Survey, which polls CEOs, CFOs, controllers and other CPAs in U.S. companies who hold executive and senior management accounting roles. Hiring plans also continued to soften from late last year.

Some 48% of respondents expressed optimism about the U.S. economy over the next 12 months, down from 52% last quarter and well below the first quarter mark of 68%. The impact of a global economic slowdown and domestic regulatory concerns were among the top reasons cited for the slide.

“Because of economic uncertainty, we’re seeing a more cautious approach to hiring at most companies, particularly the largest ones,” said Arleen R. Thomas, the AICPA’s senior vice president of management accounting and global markets. “If there’s a silver lining, 61% of executives who work at companies with annual revenue of less than $10 million said they expect their business to expand in the coming year, up from 47% last quarter.”

There was a modest increase (+1 percentage point) in optimism about prospects for survey takers’ own businesses, which rose to 59 percent after successive declines over the past two quarters.

Some 52% of business executives say their company currently has the right staffing. Another 18% said they are looking to hire immediately, down from 21% last quarter. The biggest shift, however, came in companies that need more employees but are hesitant to hire – one-in-five survey takers say their organizations now fall in this category, up six percentage points from last quarter.

Overall, expected headcount growth for the next 12 months fell 0.2 percentage points in the past quarter to 1.3 percent. It had been as high as 2.1 percent in the fourth quarter last year.

The CPA Outlook Index – a comprehensive gauge of executive sentiment within the AICPA survey – fell one point in the third quarter to 71, the third consecutive drop from a post-recession high of 78 in the fourth quarter of 2014. The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and greater numbers signifying positive sentiment.