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In the News: CPAs in the Corner Offices Increasingly Concerned about U.S. Economy

Business executives are increasingly less optimistic about the state of the U.S. economy. That’s according to the 3rd Quarter Economic Outlook Survey, a poll of AICPA members serving as CEOs, CFOs and other senior accounting positions.

The survey, which was released late last week, found that respondents who were optimistic dipped below 50 percent--to 48 percent--for the first time since early 2014. The impact of worldwide economic slowdown and domestic regulatory concerns helped fueled this slide.


EOSThe CPA Outlook Index -- a comprehensive gauge of executive sentiment within the AICPA survey -- fell one point in the third quarter to 71, the third 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. 

 

The Washington Post noted that optimism among executives dropped for the second straight quarter. This was down from 52 percent last quarter and well below the first quarter mark of 68 percent. 

CBS covered the survey, writing that ‘if the mindset of America’s business leaders is any indication, expect trouble ahead.’ Their article noted that only 18 percent of business executives are looking to hire, down from 21 percent in the prior quarter. While executives said they actually need more staff, they are reluctant to hire because this will add to their companies' payroll demands. Executives also are paring back plans for salary hikes. Employees are likely to see raises of only 1.3 percent, down from a five-year high of 2.1 percent at the end of 2014. Economists consider a salary growth of 3-4 percent to be a more "normal" rate.

“Because of business uncertainty, we're seeing a more cautious approach to hiring at most companies, particularly the largest ones," said Arleen R. Thomas, CPA, CGMA, the AICPA's senior vice president of management accounting and global markets. "If there's a silver lining, 61 percent of executives who work at companies with annual revenues of less than $10 million said they expect their business to expand in the coming year, up from 47 percent last quarter."

CPA Practice Advisor’s article on the survey pointed out a modest rise in optimism about prospects for survey takers' own businesses, which rose to 59 percent after successive declines over the past two quarters. This optimism is reflected in part through slightly higher expectations for growth in profits and revenue over the next 12 months.

Other key findings of the survey included:

Staffing Industry Analysts, a publisher of market research reports, pointed out that despite the softening employment picture, the availability of skilled personnel was regarded as a Top 3 challenge for businesses for the first time since the fourth quarter of 2014.

• The percentage of companies expecting their businesses to expand dropped 1 percentage point over the past quarter to 60 percent. But, only 3 percent of companies expect their business to shrink significantly, which is in line with last quarter and a major improvement over the 19 percent who answered that way in the first quarter of this year.

• Growth in IT investments led spending categories. However, anticipated spending on training dropped to a 1.4 percent growth rate - down from 1.8 percent in the second quarter.

Are you seeing gloom and doom in the U.S. economy or brighter days in the coming year? Let us know in the comments.

James Schiavone, Senior Manager – Public Relations

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