CPA executives getting gloomy about economy
Business executives who are also CPAs are expressing a more pessimistic outlook on the global economy, according to a new survey by the American Institute of CPAs.
The AICPA Economic Outlook Survey found a declining percentage of respondents who said they’re optimistic about the prospects for the global economy over the next 12 months. Whereas 40 percent said they were optimistic in the fourth quarter of 2018 and 71 percent said so a year ago, only 34 percent expressed optimism in the first quarter of this year. Optimism about the U.S. economy has also fallen over the past year but remains unchanged from last quarter at 57 percent.
“Trade tensions, the cooling economy in China, the looming overhang of Brexit on the United Kingdom and European Union, a series of regional conflicts – all of these have contributed to a sense of uncertainty and pessimism about the global economy,” said Ash Noah, managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants. “On the other hand, we’re seeing a bit more of a stable outlook for the U.S. economy this quarter.”
Meanwhile, expectations for profit and revenue growth over the next 12 months edged up in the first quarter of this year after a big drop in the fourth quarter of last year. Profit growth estimates grew to 3.6 percent from 3.4 percent last quarter (the lowest rate since the second quarter of 2017), while revenue growth expectations ticked up from 4.3 to 4.4 percent. Both profit and revenue growth forecasts,. However, remain well below a year ago.
Availability of skilled personnel is still the top challenge for businesses, as it has been since the third quarter of 2017. The number of business executives who said their companies have too many employees grew slightly in the first quarter, from 6 to 8 percent. Overall, 48 percent of survey respondents said their companies currently have the right number of employees. Of the 41 percent who have too few employees, some 15 percent said they were reluctant to hire, while 26 percent said they planned to hire immediately.
In terms of the outlook for their own organizations, the percentage of U.S. executives who said they were optimistic about their own company’s prospects in the next 12 months fell from 68 percent to 65 percent this quarter. Respondents who anticipate their organizations to expand in the year ahead also declined slightly, from 67 to 66 percent. In addition, 43 percent of the CPA executives polled cited a global economic slowdown as their top concern amid rising trade tensions, up from 36 percent who said the same in the third quarter of 2018, the last time the question was asked.
After availability of skilled personnel, the No. 2 and No. 3 challenges respondents cited for their businesses were “domestic compensation” and “employee and benefit costs,” respectively.
A 71 percent majority of U.S. business executives polled see a neutral impact to their company’s bottom line from Brexit, but the percentage who anticipate a negative impact grew to 16 percent from 4 percent in the second quarter of last year, the last time the question was asked.