Inflation worries and the labor shortage are dragging down optimism in the U.S. economy, according to a survey by the American Institute of CPAs.
The fourth-quarter
Inflation is now the main concern cited by survey respondents, followed by the limited availability of skilled personnel. The tight labor market remains a factor in an expected boost in salary and benefit costs, which are anticipated to rise 4.3% over the next 12 months, the fastest rate since before the Great Recession and an increase from the 3.7% projected rate last quarter.
Profit expectations are also narrowing, with the anticipated growth rate for the next 12 months dropping to 2.1% from 2.5% in the third quarter. Revenue growth projections, conversely, are up to 4.7% from 4.3%, quarter over quarter.
In terms of hiring, 39% of business executives said their organizations want to hire immediately, while another 15% admitted they had too few employees but are hesitant to hire. Some 44% indicated they saw no improvement in their pool of potential job candidates after the end of extended federal unemployment benefits in September. Approximately one-third (32%) said they saw at least a slight improvement.
"Inflation, hiring difficulties and the pandemic are all factors in the diminished economic outlook,” said Ash Noah, vice president and managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants, in a statement. “Our survey was conducted before the potential impact of the pandemic’s omicron variant emerged, but the ongoing repercussions of COVID-19 are unmistakable. Almost a third of business executives said they were keeping safety protocols in place longer than expected, and another 15% said they continue to have delayed timetables for some reopening plans.”
The CPA Outlook Index, which measures executive sentiment within the AICPA survey, stands at 74, down 1 percentage point from last quarter. The survey also found that 53% of the respondents said the most difficult positions for their organizations to fill are entry-level jobs, while another 28% indicated their difficulties were across the board. The strongest headcount growth over the next 12 months is anticipated in the manufacturing, retail trade and construction sectors. Some 18% of respondents said their organizations are still not increasing business travel to the amount they had expected at this point. Optimism about the global economy declined to 33%, down five percentage points from the third quarter, while business expansion plans were flat quarter over quarter.
