CPA business execs hold gloomier view of economy
Business executives who are also CPAs now have the least optimistic view of the U.S. economy in three years, thanks to the trade war and fears of a global economic slowdown, according to a new survey by the American Institute of CPAs.
The third-quarter AICPA Economic Outlook Survey polled CEOs, CFOs and other CPAs at U.S. companies who hold executive and senior management accounting roles about their attitudes toward the economy. While 42 percent of the survey respondents expressed optimism about the U.S. economy’s outlook over the next 12 months, that was down from 57 percent over the past three quarters. Positive sentiment about the U.S. economy has been as high as 79 percent in early 2018 and hadn’t dropped below 50 percent since the third quarter of 2016, when it plummeted to 38 percent.
CPA business executives had an even dimmer view of the global economy in Q3, with only 24 percent of the survey respondents expressing optimism, down from 35 percent last quarter, thanks to intense uncertainty over the U.S.-China trade war and Brexit.
Forty-five percent of the CPA business executives polled blamed trade conflicts for some negative impact on their business over the past 12 months, with 16 percent indicating the trade disputes had a significant or moderate impact. They anticipate matters will only get worse, with 54 percent saying they had an unfavorable view of global trade effects on their business over the next 12 months, compared to this past year.
“Global trade tensions have been an issue for some time now, but it’s clear business executives are more concerned about growing volatility and risk in this area,” stated Bob Sannerud, who chairs the Association of International Certified Professional Accountants’ Americas Regional Advisory Panel and is CFO of Life Link, an air medical transportation company. “We’re seeing that uncertainty weighing on spending and hiring plans over the past few quarters.”
CPA business execs are more positive about their own companies’ outlooks and expansion plans than the U.S. and global economies in general, but these categories have also fallen to levels not seen since late 2016. The percentage of U.S. business executives who expressed optimism about their own company’s prospects over the next 12 months declined from 62 percent to 58 percent in the third quarter. Profit and revenue growth expectations for the next 12 months were 2.8 percent and 4.2 percent, respectively. But both figures were down 1.5 percentage points from a year ago and were at their lowest level since the third quarter of 2016. Survey respondents who anticipate their organizations will expand in the ahead year also fell two percentage points to 61 percent.
The CPA execs polled once again cited availability of skilled personnel as the top challenge for their businesses, as they have since the third quarter of 2017. The number of survey respondents who said their companies had too few employees fell from 44 percent to 38 percent this quarter, while those who said their companies had too many employees ticked up slightly. A slight majority (51 percent) of respondents said their businesses had the right number of employees. Domestic economic conditions and domestic political leadership were just behind skilled personnel as the top three business challenges in the third quarter.