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CPAs’ confidence in US economy drops

December 07, 2018

Optimism about the US economy fell sharply among certified public accountants who hold leadership positions in their companies — such as CEO, CFO or controller — since the last quarter, according to the fourth-quarter Economic Outlook Survey released by the American Institute of CPAs. However, they continue to hold strongly positive views of their own companies’ prospects and hiring plans remained strong.

Fifty-seven percent of survey respondents expressed optimism about the US economy over the next 12 months, down 12 percentage points from last quarter and a steep decline from the post-recession high of 79% set at the start of the year. Trade issues and rising interest rates were cited as factors for the decline this quarter, along with concern about the US deficit and underlying issues such as corporate and personal debt levels. The survey was conducted after the recent midterm elections.

However, business executives’ outlook for their own companies held relatively firm at 69%, a decline of a single percentage point from last quarter.

“We see continued concern about potential trade conflicts and the impact of interest rate changes,” said Arleen Thomas, managing director of Americas and CGMA global offerings for the AICPA. “Still, even though business executives are taking a more tempered view of revenue and profit growth in the coming year and expect to rein in spending in some areas, they maintain fairly broad optimism about business expansion and their own companies’ prospects.”

Overall, 50% of the executives surveyed reported their company currently has the appropriate number of employees, up from 46% in last quarter’s survey. The percentage of companies planning to hire fell to 28% from 32% in the third-quarter report. Respondents who said they had too few employees but were reluctant to hire rose to 14% from 12%.

“Availability of skilled personnel” remained the top challenge for businesses, a position it has occupied since the third quarter of 2017. Almost half of survey respondents, 48%, said they planned salary, wage or commission increases in the next 12 months to help retention and recruitment amid the tight labor market.

Meanwhile, the CPA outlook index — a gauge of executive sentiment within the survey — fell three points to 76, its lowest level since the second quarter of 2017 but still strongly positive. An index rating above 50 indicates a positive outlook.

The survey of AICPA business and industry members was conducted from Nov. 7 to Nov. 28, 2018, and included 938 qualified responses.


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