Tariffs, Interest Rates Cause Execs to Rein in Optimsim

NEW YORK – Executives are reining in their optimism about the economy for the second quarter in a row, according to the America Institute of CPAs’ Economic Outlook Survey, as concerns set in about the impact of tariffs and rising interest rates.

In the quarterly survey, 69% of executives said they’re optimistic about the economy over the next 12 months, down five percentage points from the second quarter and 10 percentage points from the first.

Revenue and profit expectations were up, however, to 4.3% and 5%, respectively. Executives said their optimism about their own companies slipped to 69%.

“It’s unusual to see a decrease in U.S. economic optimism when key performance indicators such as profit and revenue are perceived to be on the rise,” said the AICPA’s Arleen Thomas in a release. “On the one hand, business executives are encouraged by the impact of federal tax reform and reduced regulation at home, but there is some concern about trade wars, interest rate hikes and other factors that could contribute to a global economic slowdown.

49% of executives said the impact of tariffs would be unfavorable for their business, while just 4% said it would help. 44% said the impact would be neutral or minimal.

For the fifth consecutive quarter, finding skilled workers remained the top challenge for businesses as only 46% of executives said their company has the right among of employees. Of the 44% saying they have too few, 12% of the group said they were reluctant to hire – the lowest level since the Great Recession – and 32% said they planned to hire immediately, a post-recession high.

Elsewhere in the survey, 68% said the Tax Cuts and Jobs Act would be favorable for their business in the next 12 months and 23% said their outlook has become more favorable since the beginning of the year.

A full copy of the report is available here.

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