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In the News: U.S. Economy Takes Two Steps Forward, One Step Back

CPA Outlook IndexIn the midst of continued uncertainty, the nation – and by extension, news coverage - has been increasingly focused on the economy. Yesterday, the AICPA released the results of the second quarter Economic Outlook Survey, which showed that CPA business executives who hold leadership positions, such as chief financial officer or controller, in their companies, had grown more pessimistic about the U.S. economy, compared with last quarter.

The survey results were covered in the Wall Street Journal’s Real Time Economics Blog, which noted that the CPA outlook index slipped to 67 this quarter from 69 in the first quarter. A reading above 50 indicates a generally positive outlook with increasing activity. The index has ranged between 60 and 70 for the past two years.

“What we're seeing is the same ‘two steps forward, one step back’ cycle we encountered last year,” said Arleen R. Thomas, CPA, CGMA, the AICPA’s senior vice president for management accounting. “There's no question survey takers have grown more pessimistic about the U.S. economy, and, with expectations muted for profit, revenue and employment growth, there appear to be few catalysts to change that view.”

WRAL in North Carolina’s coverage of the survey highlighted that only 12 percent of firms reported they were planning to hire, down from 14 percent the previous quarter, opining that with the U.S. unemployment rate at 8.2 percent, there appears little chance of much improvement in the jobs situation.

Additional findings of the survey include:

·Industry View – Executives from only two industries—health-care providers (such as hospitals and nursing homes) and construction—expressed more sector optimism this quarter than in the previous one. Retail and wholesale trade were unchanged quarter to quarter, while all other industry categories dropped.

·Business Expansion – 61 percent of senior-level CPAs said they expect their companies to expand over the next 12 months, a number unchanged from the first quarter. One area where there was a drop: Expansion plans for businesses with more than $1 billion in sales, which fell from 65 percent to 62 percent. This is the first time since early 2010 that the nation’s largest businesses are not the most likely group to have growth plans.

·Top Challenges – Survey takers have identified the same top three business hurdles in each of the past three quarters: 1) Domestic economic conditions, 2) Regulatory requirements/changes, and 3) Employee and benefit costs. There was movement within the rest of the Top 10, however; “Domestic political leadership” continued its climb to No. 4, and “Global economic conditions” jumped from No. 10 to No. 7 since last quarter. 

The second quarter AICPA Business and Industry Outlook Survey was conducted from May 16-31, 2012, and included 1,250 qualified responses.

What have you been seeing in your own company? Are they planning to hire more workers?

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