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In the News: CPAs in the C-Suite See U.S. Economy Slumping

Business executives grew less confident about prospects for the U.S. economy over the past quarter. That’s according to the 2nd quarter Economic Outlook Survey, which polls AICPA members who serve as chief executive officers, chief financial officers and controllers. The survey found that while the majority (52 percent) of respondents still expressed optimism about the U.S. economy, there has been a significant slide in sentiment from the first quarter level of 68 percent.

EosThe CPA Outlook Index -- a comprehensive gauge of executive sentiment within the AICPA survey -- fell two points in the second quarter to 72, the second consecutive drop. 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 News & Observer noted that optimism among executives regarding their own businesses’ prospects also slipped for the second consecutive quarter -- from 63 percent to 58 percent. That decrease is reflected, in part, through more modest expectations for growth in profit (2.4 percent) and revenue (3.2 percent) over the next 12 months, down from post-recession highs of 3.9 percent and 4.7 percent, respectively, in the fourth quarter last year. 

The American Business Journal cited the survey as well, writing that more than 60 percent of executives said their companies expect to expand in the near future, but that number is only 53 percent for big businesses -- a steep drop from last quarter’s 77 percent.

“We’re clearly seeing more caution from accounting and finance leaders amid questions about the momentum of the recovery,” said Valerie Rainey, CPA, CGMA, chair of the AICPA’s Business and Industry Executive Committee and CFO of INTTRA, in Parsippany, N.J in a statement. “On the positive side, there are signs that businesses are investing for growth through anticipated spending on technology and training, among other categories.”

Accounting Today reported that the survey found most companies (61 percent) expect to expand. Some 22 percent expect to stay the same size, while 17 percent expect to contract. Only 53 percent of the largest businesses ($1 billion-plus in sales) expect to expand, however, down from 77 percent in the previous quarter.

Other key findings of the survey:

  • CBS Marketwatch noted that the survey found that employee and benefit costs now rank as the second biggest challenge cited by business executives, following regulatory requirements.
  • Sentiment about the global economy remains negative; only 28 percent of survey takers expressed optimism about this category
  • Hiring remains stable. About 55 percent of respondents say their businesses have the right amount of staff. Twenty-one percent said they have plans to hire immediately, which is in line with last quarter’s survey.

 

Methodology
The second quarter AICPA Business and Industry Economic Outlook Survey was conducted May 12-27, 2015, and included 570 qualified responses from CPAs who hold leadership positions, such as chief financial officer or controller, in their companies. The overall margin of error is less than 3 percentage points. A copy of the  report can be found on aicpa.org

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