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CPAs Outlook on U.S. Economy Drops for Third Straight Quarter

CPAOI 4qDespite the traditional festive mood of the holidays and consumer confidence at a 6-month high, CPAs in business and industry are not impressed.

In fact, CPA financial executives reported their dimmest view of prospects for the U.S. economy since 2011 in the results of the AICPA’s fourth quarter Economic Outlook Survey. Why so sad? The main reasons cited for increased pessimism are the threat of the looming fiscal cliff, combined with concerns over future sales and profitability.

While optimism has declined over the past three quarters, the fourth quarter survey did not include any silver lining as every major measure of economic expectations fell, both quarter over quarter and year over year. 

Jim Morrison, CPA, CGMA, chair of the AICPA’s Business and Industry Executive Committee and CFO of Teknor Apex Co, discussed the bleak results with Wall Street Journal Radio, saying, “The last time we had three similar consecutive quarters of downward movement was back in the third quarter of 2008, just before things really went south.”

The CPA Outlook Index - a composite of nine, equally weighted survey measures set on a scale from 0 to 100 - fell four points to 59 for the quarter. The index had matched a post-recession high of 69 at the start of this year. Eternal optimists can take some solace in the fact that, despite the increased pessimism, results greater than 50 signify positive sentiment.

Contributing to outlook, plans for investment in information technology, training and capital spending are all below levels from a year ago. Similarly, expectations for headcount growth are at their lowest levels since the third quarter of 2010. 

“While most executives are still projecting modest growth for their businesses, the trends for hiring plans suggest retrenchment rather than recovery,” said Arleen R. Thomas, CPA, CGMA, the AICPA’s Senior Vice President, Management Accounting & Global Markets. “Only 8 percent of companies have immediate plans to hire, and the number of businesses that say they have too many workers is on an upswing.”

Morrison echoed those sentiments, telling the Wall Street Journal Radio that “jobs will be hard to come by in this climate of slow growth and uncertainty.”

The survey was conducted Nov. 8-29, 2012, and included 1,668 qualified responses.

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