Business Execs Take Dimmer View of Economy

NEW YORK — Business executives hold their least optimistic view of the U.S. economy in three years, in part due to trade concerns and fears of a sustained global slowdown, according to the American Institute of CPAs.

The organization’s third-quarter economic outlook survey polled chief executive officers, chief financial officers, controllers and other certified public accountants in U.S. companies who hold executive and senior management accounting roles.

Some 42% of survey takers expressed optimism about the U.S. economy’s outlook over the next 12 months, down from 57%, the level it held for the past three quarters. Positive sentiment on the U.S. economy had been as high as 79% in early 2018 and had not fallen below 50% since the third quarter of 2016, when it stood at 38%.

The global economy was viewed in an even worse light, with less than a quarter (24%) of executives expressing optimism, down from 35 percent last quarter. The survey was conducted during a period of intense uncertainty over U.S.-China trade and tariff conflicts and the resolution of Brexit, the United Kingdom’s planned withdrawal from the European Union.

Some 45% of business executives said trade conflicts were to blame for some negative impact on their business over the past 12 months, with 16% saying it had a significant or moderate impact.

And they expect things to get worse: 54% said they had an unfavorable view of global trade impacts on their business over the next 12 months, as compared to the past year.

Business executives are more positive about their own companies’ outlooks and expansion plans than the U.S. and global economies in general, but these categories have also fallen to levels not seen since late 2016.

“Global trade tensions have been an issue for some time now, but it’s clear business executives are more concerned about growing volatility and risk in this area,” said Bob Sannerud, CPA, chair of the AICPA Americas Regional Advisory Panel and chief financial officer of Life Link, an air medical transportation company.  “We’re seeing that uncertainty weighing on spending and hiring plans over the past few quarters.”

Availability of skilled personnel remains the top challenge for businesses, a position it has occupied since the third quarter of 2017. The number of survey takers who said their companies had too few employees dropped from 44% to 38% this quarter, while those who said they had too many employees ticked up slightly. Some 51% of respondents said their businesses had the right number of employees.

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 August employment report, scheduled for release tomorrow, looks back on the previous month’s hiring trends.

The CPA Outlook Index — a comprehensive gauge of executive sentiment within the AICPA survey — now stands at 72, down three points from last quarter. The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and greater numbers signifying positive sentiment.

All components of the index fell or were flat this quarter, with the biggest drop due to U.S. economic sentiment. Other key findings of the survey:

  • Profit and revenue growth expectations for the next 12 months were 2.8% and 4.2%, respectively. Both numbers were down 1.5 percentage points from a year ago and represented their lowest level since the third quarter of 2016.
  • The percentage of U.S. executives who expressed optimism about their own company’s prospects over the next 12 months fell from 62% to 58%, quarter over quarter.
  • Survey respondents who said they expect their organizations to expand in the coming year also fell two percentage points to 61%.
  • Domestic economic conditions and domestic political leadership joined availability of skilled personnel as the top three business challenges this quarter

The survey was conducted from July 30 to Aug. 21 and included 755 qualified responses from CPAs 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

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