CPA business execs lower expectations for economy

CPA business executives are growing increasingly concerned about the outlook for the U.S. and global economy, according to a new survey by the Association of International Certified Professional Accountants.

The quarterly AICPA Economic Outlook Survey for the second quarter of this year polled CPAs who serve as CEOs, CFOs, controllers in other executive and senior management accounting roles at U.S. companies. It found that only 57 percent of survey respondents expressed optimism about the U.S. economy’s outlook over the next 12 months, a drop from the 79 percent who expressed optimism at the beginning of last year. U.S. executives also still have a dim view of the global economy, with only 35 percent expressing optimism, up only 1 percentage point from the first quarter.

In recent quarters, the CPA business executives polled by the AICPA had a more upbeat view of expansion prospects and their own companies’ outlook. However, that feeling has gradually eroded, and both categories are now at their lowest level since late 2016. Similar pessimism holds true for 12-month revenue and profit expectations, which fell in the second quarter from 4.4 percent to 4.2 percent and 3.6 percent to 3.1 percent, respectively.

“While business executives’ expectations for their companies and the perceived environment those companies will be operating in over the next year have been tracking downwards, there’s been a slight disconnect between these for the past few quarters," said Ash Noah, managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants. “In this quarter, we’ve seen a bit of a reset and the indicators are more closely aligned. With so much uncertainty over trade and other global issues, companies are taking a more conservative stance on their potential performance.”

The biggest challenge cited by the survey respondents is availability of skilled personnel, as it has been since the third quarter of 2017. Two other staffing-related issues are among the top five challenges this quarter: employee and benefit costs (No. 2) and staff turnover (No. 5).

Thanks to the tight labor market, the CPA business executives polled predict a 2.7 percent increase in salary and benefit costs over the next 12 months, a 0.1 percent increase over the forecast in the first quarter. Some 86 percent of respondents expect to raise salary levels and wages in the next 12 months, with 64 percent saying they anticipate those increases to fall between 3 and 5 percent. Only 8 percent said they don’t plan to raise salaries and wages at all.