Reducing high unemployment rates, curbing entitlement spending, and reforming burdensome federal regulations are ways to resuscitate the U.S. economy, according to a survey of senior executive CPAs in New York, New Jersey and Pennsylvania.
Nearly half the respondents—who primarily were CEOs, CFOs, accounting firm partners and other industry leaders residing in the three states surveyed—say economic conditions in the U.S. will likely be the same one year from now. While they predict increases in their own business revenues they are expecting little change in the U.S. workforce.
The survey was sponsored by the New York State Society of CPAs, the New Jersey Society of CPAs and the Pennsylvania Institute of CPAs. The survey was conducted this past September and October by Franklin & Marshall College’s Center for Opinion Research.
“CPAs have identified several key issues that are preventing a jumpstart in the economy,” said NYSSCPA executive director Joanne S. Barry in a statement Thursday. “As business leaders in their communities, CPAs are on the front lines in terms of spotting and reacting to economic trends.”
When CPAs were asked to rate the red tape in state and local governments, New York fared the worst, with 59 percent of survey respondents indicating it was worse than ever, followed by Pennsylvania (42 percent) and New Jersey (39 percent).
A majority of CPAs polled in the three states said employees are considering delaying retirement, with more than 70 percent of respondents noting that the struggling economy was the biggest factor in making the decision to delay retirement.
In addition, more than 90 percent of the CPAs said the implementation of the Affordable Care Act is prompting them to re-evaluate their current insurance packages, with a majority of them saying they are postponing their hiring decisions and increasing the number of part-time employees.
The growth of pension funding and entitlement spending —for health care, disability, and unemployment compensation—coupled with a sharp decline in the number of working adults has stalled economic growth, the CPAs assessed.
In New York State, three in five CPAs believe their state government red tape is worse than ever. Nearly half of the CPAs polled (48 percent) believe additional casinos in upstate New York will have a positive or very positive impact on the economy. Attitudes were split about the benefit of tax-free zones surrounding state university campuses, with 42 percent expecting a positive impact and 41 percent saying there will be no impact on the state’s economy.
Only three in 10 (28 percent) New Jersey CPAs believe the business climate in the state is excellent or good, and a majority (58 percent) believe the state’s business climate hinders economic growth. More than half (56 percent) of the state’s CPAs, however, say there has been noticeable improvement in the state’s business climate since Gov. Christie took office in January 2009. The New Jersey CPAs are in relative agreement that reducing property tax rates (39 percent of those surveyed) and reforming state government pensions and benefits (36 percent) would improve economic expansion in the state.
“Overall, the numbers are going in the right direction, but it’s a daily battle,” said NJSCPA CEO and executive director Ralph Albert Thomas. “Our hope is that the federal and state governments will do their best to mitigate risk and uncertainty and continue to reach out to business groups—such as CPA societies—for feedback when considering pro-business policies.”
Nearly half (48 percent) of Pennsylvania CPAs rank rising health care costs and pension funding for public employees as the top two state issues that will hinder future economic growth in Pennsylvania. Significantly more CPAs in Pennsylvania (23 percent) feel that the tax structure in their state is better than in most other states when compared to CPAs in New York (4 percent) and New Jersey (2 percent).
“CPAs have unique insight into the business community through their work in public accounting serving multiple clients and in industry where they work with other C-suite executives,” said PICPA CEO and executive director Michael D. Colgan. “This survey shows that our members are projecting growth in revenues in the coming year, which should translate into continued growth across multiple sectors of the (state) economy.”
To download the full survey, visit http://www.nysscpa.org/economic_survey/current-economic-conditions-2013.pdf.
AICPA Economic Outlook Survey
In contrast, the American Institute of CPAs also released its quarterly survey Thursday of the economic outlook from CPA business executives nationwide. The AICPA survey found that the business executives it polled across the country remain optimistic about their companies’ prospects for the coming year, but that sentiment is offset by deeper pessimism about the U.S. economy.
This may have implications for hiring plans, according to the fourth quarter AICPA Economic Outlook Survey, which polls CEOs, CFOs, controllers and other CPAs in U.S. companies who hold executive and senior management accounting roles.
Executives in the survey usually have a much more positive outlook for their own organization than for the U.S. economy. This quarter, though, the outlook for individual companies is up slightly (57 percent positive, compared to 55 percent last quarter), while optimism about the U.S. economy is falling (38 percent positive, down from 44 percent a quarter ago).
That split view is evident in hiring plans, which appear to be softening after increasing last quarter. Business expansion expectations are virtually identical to last quarter, with 62 percent of executives saying they expect to grow at least a little in the coming year. There is a slight decrease, however, in the proportion of poll respondents who said they are looking to hire immediately (13 percent, down from 15 percent last quarter), and headcount increase projections fell one-tenth of a percentage point from 1.3 percent to 1.2 percent in the past quarter.
The U.S. Economic Optimism component of the index is up more than any other category, year over year (plus 20 points), but it has been falling since midyear, fueled by concerns about regulation, political gridlock and employment, among other issues.
“There is a lot of good news in these survey results about business executives’ growing confidence in conditions, from profit expectations to plans for investment in training and technology,” said AICPA’s senior vice president of management accounting and global markets Arleen R. Thomas in a statement. “But it’s clear that uncertainty on the economy continues to play a major factor in hiring plans.”
Of those respondents who indicated they planned to hire soon, 72 percent said they would mainly look for full-time workers. Another 24 percent said they would hire a combination of full-time and part-time employees.
Technology reclaimed its spot as the most optimistic sector. It also continues to lead the pack in anticipated headcount growth at 3.6 percent, an increase over last quarter’s 2.6 percent growth projection for the coming year.
Optimism among retail respondents took a dramatic drop from 64 percent to 52 percent, quarter over quarter. Headcount for the sector is expected to increase 1.3 percent in the coming year, down from a projection of 1.8 percent last quarter.
Profit and revenue expectations continue to show improvement, among the CPA executives polled by the AICPA. IT spending is the top category for projected spending growth (2.9 percent) over the next 12 months.
The top three business challenges cited by the AICPA survey respondents was the same as last quarter, although the second and third items swapped places since last quarter: 1) regulatory requirements and changes, 2) employee and benefits costs, and 3) domestic economic conditions.
For the AICPA survey, click here.
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