Accountants feeling more downbeat about economy in Q3
Economic confidence among accountants worldwide dropped to its lowest level in eight years during the third quarter, according to a new report from the Association of Chartered Certified Accountants and the Institute of Management Accountants, although it improved slightly among accountants in the U.S. and the U.K.
The latest Global Economic Conditions Survey (GECS) released Thursday by the ACCA and the IMA found that the slight increase in confidence in the U.S. and U.K. occurred in the midst of a significant global decrease to the lowest level in nearly eight years (with the largest drops in Asia Pacific and South Asia) while the global orders index remained at its lowest level since the third quarter of 2016, indicating an intensifying global slowdown next year.
“Fears of a global recession are mounting as the world economy and trade slows and well-documented risks become elevated,” said Warner Johnston, head of ACCA USA, in a statement. “Risks are on the downside, but a global recession is still unlikely, given the strength of the jobs market in many developed economies and the shift to monetary ease by many central banks.”
While the U.S. economy has held up relatively well despite the fading impact of the Tax Cuts and Jobs Act, interest rate cuts by the Federal Reserve have been necessary to maintain a reasonable pace of economic activity and act as an insurance policy against the risks facing the global economy, according to the report. Consumer spending has been strong so far this year, thanks to the job market. The GECS U.S. capital expenditure index has been fairly stable in recent quarters and so far doesn’t indicate a major investment slowdown. Both the job market and the housing market are likely to support continued consumer spending growth and prevent a U.S. recession.
“The evidence so far of a significant slowdown in the real economy is mixed,” stated IMA vice president of research and policy Raef Lawson. “Investment has weakened but the consumer is relatively buoyant. … But confidence is still at a very low level, close to the all-time low, undermined by the trade war with China and a slowing global economy. Our view remains that a U.S. recession is highly unlikely, either this year or in 2020.”
Separately, the Accountants Confidence Index from Accounting Today and ADP found a steep decline in confidence in the economy last month (see ACI — September 2019: A deeper drop)