Business leaders who are also CPAs have become more optimistic about revenue and profit expectations this year, though they still harbor concerns about the overall economy, according to a new survey.
The quarterly
However, optimism is still not high among many of the executives polled. Only 23% expressed optimism about the prospects for the U.S. economy over the next 12 months. But that's still better than the fourth quarter, when only 12% of the respondents felt that way, the lowest level since early 2009.
Inflation, rising interest rates and geopolitical concerns are all contributing to the pessimistic outlook, with 90% of survey respondents indicating they're concerned about recessionary impacts.
Despite those worries, many indicators are trending up this quarter, with business executives anticipating slight profit growth of 0.6% over the next 12 months, a reversal from the either negative or zero growth expectations over the past two quarters. Similarly, 12-month revenue growth projections are recovering, increasing from an expected 2.1% rate in the fourth quarter of 2022 to 2.6% in the first quarter of 2023.
Business executives who expressed optimism about their own companies' prospects over the next 12 months increased from 35% to 47%, quarter over quarter. Over half the executives polled (52%) now expect their companies to expand at least slightly over the next 12 months, up from 47% last quarter. Businesses with over a billion in revenue led this category by a healthy margin, with 68% expecting expansion.
The U.S. hiring picture is also looking good, despite some softening. Less than half (45%) of the executives polled believe they have the right number of employees, up from 39% last quarter. Moreover, 9% of the business executives surveyed said they had too many employees, an uptick of a single percentage point from last quarter.
"While hiring demands may be cooling a bit, we're not seeing widespread layoffs — most companies are looking to interim strategies to protect their workforce options," said Tom Hood, executive vice president for business engagement and growth at the AICPA and CIMA, in a statement. "In fact, a third of business executives say they're looking to hire immediately, while 'availability of skilled personnel' continues to be a top concern from the survey. This illustrates the unique pressures companies have been under the past year, with so much uncertainty clouding financial modeling."
Nearly one-third of executives polled (32%) indicated they're taking steps to reduce staffing costs. Approximately 17% have instituted hiring freezes and ended recruitment for open jobs. Other strategies, used to a lesser extent, include layoffs, reduced shifts or hours of operation, and increased outsourcing.
The 12-month outlook on the global economy also improved among the respondents, with those expressing pessimism declining from 72% in Q4 2022 to 48% in Q1 2023. Inflation was the top concern of business executives for the sixth quarter in a row. "Availability of skilled personnel" and "employee and benefit costs" flipped places and are now the No. 2 and 3 challenges, respectively.
