US Executives Temper Strong Optimism on Economy
NEW YORK — Business executives are taking a more conservative view of what had been bullish optimism about both the U.S. economy and prospects for their own companies earlier this year, according to the second-quarter American Institute of CPAs Economic Outlook Survey.
The survey polls CEOs, chief financial officers, controllers and certified public accountants in U.S. companies. Those who expressed optimism about the 12-month outlook dropped from 69% last quarter – a 13-year high for the survey – to 64%. Respondents also pulled back slightly on optimism about their own company’s prospects (66% to 64%, quarter over quarter) and their organization’s plans for expansion (67% to 64%). Optimists and pessimists alike noted more uncertainty in the economic climate.
On the hiring front, some 40% of business executives said they had too few employees. Nearly one-in-four (24%) said they planned to hire immediately, a significant improvement from the 19% expressing that view a year ago. Another 16% said they need more staff, but were hesitant to hire.
There is a growing perception of tightness in the labor market. Asked to list their top challenges, business executives put “availability of skilled personnel” at No. 2 on the list and “staff turnover” at No. 6. Those categories were No. 3 and No. 9, respectively, last quarter.
“Staff turnover has been a rising concern since the end of 2016, and we’ve seen steady perceptions of a shrinking talent pool over several quarters,” said Arleen R. Thomas, managing director the Association of International Certified Professional Accountants. “That sets the stage for a competitive hiring situation and potentially higher salary and recruitment costs for companies.”
The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months.
Other key findings of the survey:
- Sixteen percent of business executives said they expect the Trump Administration’s proposal to lower federal corporate income taxes will be signed into law this year, while another 33% expect it to be enacted before the 2018 midterm elections.
- Twenty-four percent of business executives said a reduction in the rate of federal corporate income taxes to the 15%-20% range would be “significantly positive” for their company’s bottom line, compared to 18% last quarter. Overall, 60% percent said a lower tax rate would be positive to some degree, compared to 51% last quarter.
- The top category for investment of potential tax savings from a corporate rate reduction is increased capital expenditures (46%).
- Revenue and profit expectations for the coming year fell, quarter over quarter. Business executives now expect revenue growth of 3.9% over the next 12 months, down from 4.3%. Profits are expected to grow 3.2%, down from 3.5% last quarter.
- IT remains the strongest category for planned spending over the coming year, with an expected growth rate of 3.2%.
The American Institute of CPAs (AICPA) is the world’s largest member association representing the accounting profession, with more than 418,000 members in 143 countries.
The AICPA survey was conducted May 2-17, 2017, and included 726 qualified responses. The overall margin of error is less than 3 percentage points.
SOURCE: American Institute of CPAs.
Copyright 2018 The Business Journal, Youngstown, Ohio.
Published by The Business Journal, Youngstown, Ohio.
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