AICPA Survey: U.S. Business Executives Grow Gloomier About Global Economy

Business executives’ outlook on the global economy slid sharply over the past year, amid concerns about trade conflict and other business impacts, according to the first-quarter AICPA Economic Outlook Survey.

A little more than a third (34%) of survey respondents say they are optimistic about prospects for the global economy over the next 12 months, compared to 40% last quarter and 71% a year ago. Optimism about the U.S. economy has also declined over the past year but remains unchanged from last quarter at 57%.

“Trade tensions, the cooling economy in China, the looming overhang of Brexit on the United Kingdom and European Union, a series of regional conflicts – all of these have contributed to a sense of uncertainty and pessimism about the global economy,” says Ash Noah, managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants, the global organization that includes the AICPA and the Chartered Institute of Management Accountants. “On the other hand, we’re seeing a bit more of a stable outlook for the U.S. economy this quarter.”

Expectations for profit and revenue growth over the next 12 months edged back up after a sharp drop last quarter. Profit growth estimates increased to 3.6% from 3.4% last quarter (the lowest rate since the second quarter of 2017), while revenue growth expectations rose a tick to 4.4% from 4.3%. Both profit and revenue growth forecasts are well below those from a year ago.

The survey polls CEOs, CFOs, controllers and other CPAs in U.S. companies who hold executive and senior management accounting roles.

Other key findings of the survey:

  • The percentage of U.S. executives who expressed optimism about their own company’s prospects over the next 12 months fell from 68% to 65%, quarter over quarter.
  • Survey respondents who said they expect their organizations to expand in the coming year also fell slightly, from 67% to 66%.
  • Some 43% of business executives cited a global economic slowdown as their biggest concern regarding rising trade tensions, up from 36% who said the same in the third quarter of 2018, the last time the question was asked.
  • Most U.S. business executives (71%) see a neutral impact to their company’s bottom line from Brexit, but the percentage who see a negative impact rose to 16% from 4% in the second quarter last year, the last time the question was asked.
  • After availability of skilled personnel, the No. 2 and No. 3 challenges cited for businesses were “domestic compensation” and “employee and benefit costs,” respectively. The latter two flipped places in the past quarter.