AICPA Survey: Business Executives Foresee Less Growth in 2016

Business executives have sharply reined in expectations for profit and revenue in the coming year, with anticipated growth for those two key performance indicators now at their lowest since the end of 2012, according to the fourth quarter AICPA Economic Outlook Survey, which polls CEOs, CFOs, controllers and other CPAs in U.S. companies.

Overall expectations for revenue growth now stand at 2.9%, down from 3.3% last quarter and 4.7% a year ago, the survey found. Profit growth expectations, meanwhile, slid from 2.6% last quarter to 2%, almost half the rate from a year ago.

The dimmer projections are reflected in how business executives perceive their own companies’ prospects. Only 53% of survey respondents expressed optimism about their organization’s anticipated performance for the coming year, down from 59% last quarter and 67% a year ago. Optimism about the U.S. economy also fell since last quarter, although at a more gradual rate.

“We’re seeing rising concern about U.S. economic conditions and domestic competition,” says Arleen R. Thomas, the AICPA’s senior vice president of management accounting and global markets. “Those factors, coupled with a potential slowdown in the global economy, have contributed to a perception that growth opportunities are going to be more challenging in the near-term.”

The reduced forecasts haven’t had an immediate impact on the hiring outlook, however. Some 18% of business executives said their companies are looking to hire immediately, the same as last quarter. There was a slight drop in the percentage of respondents who said they had too few employees but were hesitant to hire (20% last quarter versus 17% this quarter). Overall, 53% of respondents said their companies had the right amount of staffing.

The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months.

The CPA Outlook Index—a comprehensive gauge of executive sentiment within the AICPA survey— fell two points in the fourth quarter to 69, the fourth 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.