Worries About Inflation, Recession and Potential U.S. Default Drag Down Economic Outlook, AICPA & CIMA Survey Finds
- Fifty-six percent of business executives now express pessimism about the U.S. economy
- Hiring picture remains strong but shows signs of softening
- Negative profit expectations resurface
NEW YORK, June 1, 2023 /PRNewswire/ -- Last quarter's modest lift in business executives' view of the U.S. economy proved short-lived, with a majority now expressing pessimism about the next 12 months, according to the second-quarter AICPA & CIMA Economic Outlook Survey. The survey polls chief executive officers, chief financial officers, controllers and other certified public accountants in U.S. companies who hold executive and senior management accounting roles.
Only 14% of business executives expressed optimism in the U.S. economy's prospects over the next 12 months, down from 23% last quarter. Those expressing pessimism increased from 44% to 56%, quarter over quarter (survey takers could also register a neutral sentiment). The slide in outlook almost matches the sentiment in the fourth quarter last year, when only 12% expressed optimism in the economy, a historic low.
U.S. business executives' outlook on the global economy stayed relatively constant, with 11% expressing optimism and 49% pessimism.
"There's a lot of noise in the system right now – inflation, higher borrowing costs, recession worries, concern about a potential U.S. default," said Tom Hood, the AICPA & CIMA's executive vice president for business engagement and growth. "Hiring demand is still strong but we're starting to see companies holding back on filling positions, essentially taking a wait-and-see attitude until economic conditions become clearer."
Some 43% of business executives said their company had too few employees, essentially the same as last quarter. But 17% said they were hesitant to hire because of economic uncertainty, up six percent from last quarter.
The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. In comparison, the U.S. Department of Labor's May employment report, scheduled for release tomorrow, looks back on the previous month's hiring trends.
Other key findings of the survey:
- Expansion plans decreased from 52% to 43%, and those who expect their businesses to contract increased from 20% to 31%, which is higher than previous periods aside from those impacted by the pandemic.
- 12-month revenue projections dropped from 2.6% last quarter to only 1.3%. Profit expectations, meanwhile, now show a -0.9% decline, down from 0.6% forecast last quarter.
- Business executives are more pessimistic about their own company's prospects over the next 12 months (35% vs. 47% last quarter), but still see brighter prospects for their organizations than the economy as a whole.
- Inflation remained the No. 1 concern of survey takers, followed by domestic economic conditions, which jumped three slots since last quarter. Employee and benefit costs stayed at the No. 3 slot. Liquidity concerns jumped in to the top 10 concerns.
- Sixty-eight percent of business executives said their companies hadn't experienced more stringent lending standards recently, aside from higher interest rates. Twelve percent said they're seeing more demand for collateral, however, while six percent said they had smaller loans approved that what they initially sought.
Methodology
The second-quarter AICPA & CIMA Economic Outlook Survey was conducted from May 2-24, 2023 and included 433 qualified responses from CPAs and Chartered Global Management Accountants (CGMAs) who hold leadership positions, such as chief financial officer or controller, in their companies. The overall margin of error is less than 3 percentage points. A copy of the report can be found on aicpa.org.
About the Association of International Certified Professional Accountants, and AICPA & CIMA
The Association of International Certified Professional Accountants (the Association), representing AICPA & CIMA, advances the global accounting and finance profession through its work on behalf of 689,000 AICPA and CIMA members, students and engaged professionals in 196 countries and territories. Together, we are the worldwide leader on public and management accounting issues through advocacy, support for the CPA license and specialized credentials, professional education and thought leadership. We build trust by empowering our members and engaged professionals with the knowledge and opportunities to be leaders in broadening prosperity for a more inclusive, sustainable and resilient future.
The American Institute of CPAs (AICPA), the world's largest member association representing the CPA profession, sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It also develops and grades the Uniform CPA Examination and builds the pipeline of future talent for the public accounting profession.
The Chartered Institute of Management Accountants (CIMA) is the world's leading and largest professional body of management accountants. CIMA works closely with employers and sponsors leading-edge research, constantly updating its professional qualification and professional experience requirements to ensure it remains the employer's choice when recruiting financially trained business leaders.
SOURCE AICPA & CIMA
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