The July installment of our Accountants Confidence Index marked a major milestone -- if a negative one -- when, for the first time since we started publishing it, our short-term ACI reading indicated that our panel of accountants expect a contraction over the next three months.

The ACI, created in partnership with ADP, is a monthly economic indicator that leverages the insights of accountants into the strength and prospects of businesses in the U.S. Both the 3-Month and 6-Month ACI readings for this month were down, to 49.56 and 51.63, respectively.

A reading under 50 indicates that the panel expects a contraction.

Panelists were particularly gloomy about the prospects of their small-business clients, and of the economy as a whole, but all of the index components were down from previous months.

While this marks a first for the ACI, it should be noted that a number of consumer confidence and sentiment indexes from the same period returned similarly negative outlooks.

The ACI is created from a monthly poll of the Accounting Today Executive Research Council, an online community of more than 1,500 tax and accounting professionals, who are asked to provide their estimates of the growth prospects of their own firms, their small, midsized and large business clients, and of the U.S. economy as a whole. Their responses are weighted and averaged to produce the ACI.