Business Executives Take a More Tempered View of U.S. Economy, AICPA Survey Finds

Business executives are taking a more cautious view of the U.S. economy and their own company’s growth prospects after two straight quarters of exuberant optimism, according to the second-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.

Seventy-four percent of business executives said they were optimistic about the economy over the next 12 months, down five percentage points from last quarter. Part of the drop-off was due to concerns about trade and political uncertainty, survey respondents said. Optimism about their own company’s outlook slipped a percentage point to 70%. Both sentiments fall in the uppermost range of post-Great Recession assessments.

Survey respondents also trimmed their expectations for profit and revenue growth over the next 12 months. Profit growth estimates slipped from 4.4% last quarter to 4%, while revenue growth projections eased from 5% to 4.8%.

“Despite their more tempered views on growth, business executives still see a strong hiring picture over the next year,” says Arleen Thomas, managing director of Americas Market, Global Offerings & CGMA Exam. “Labor market tightness continues to be a concern, with companies encountering difficulty in recruiting candidates with the right skills.”

The number of employers who said they planned to hire immediately rose three percentage points to 30% in the quarter. Another 13% said they had too few employees but were hesitant to hire, down a point from last quarter. Overall, 48% of business executives said their companies currently have the right number of employees. Still, ‘availability of skilled personnel’ remained the No. 1 challenge for businesses for the fourth quarter in a row.

The CPA Outlook Index—a comprehensive gauge of executive sentiment within the AICPA survey— dropped two points in the second quarter to 79. 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. All the index components were down or flat this quarter, except for employment, which rose a point.

Other key findings of the survey:

  • Inflation concerns, which jumped sharply last quarter, remained unchanged.
  • Technology showed surprising weakness in sector optimism, dropping from 80% last quarter to 69%. Hiring expectations for the industry also fell from 2.5% anticipated growth over the next 12 months to 2.1%. Yet tech spending plans remained strong.
  • The percentage of business executives who expect their company to expand in the coming year dropped from a post-recession high of 72% last quarter to 70%.

After availability of skilled personnel, the No. 2 and No. 3 challenges for businesses were “regulatory requirements and changes” and “employee and benefits costs,” respectively.