Business executives regained some optimism about the U.S. economy after a sharp decline in the third quarter, yet continue to rein in forecasts for profit and revenue growth, according to the fourth-quarter AICPA Economic Outlook Survey.
The survey polls CEOs, CFOs, controllers and other CPAs in U.S. companies who hold executive and senior management accounting roles.
Some 50% of survey takers expressed optimism about the U.S. economy’s overall outlook over the next 12 months, up from 42% last quarter. That’s still low for the post-recession period – positive sentiment on the U.S. economy had been as high as 79% in early 2018, the AICPA reports.
U.S. executives’ outlook on the global economy, while far more pessimistic, also improved in the quarter. Some 28% expressed optimism, up four percentage points from last quarter.
Profit growth over the next 12 months is now expected to be 2.7%, down from 2.8% last quarter and significantly below the outlook of 4.3% a year ago. Similarly, 12-month revenue growth expectations dropped a tenth of a percentage point to 3.4 %, quarter over quarter. That’s down from 5% a year ago.
“We saw a sharp drop in U.S. economic optimism in the third quarter due to the U.S.-China trade war really driving uncertainty, so this quarter represents a correction of sorts, with prospects of a reasonable outcome,” says the AICPA’s Ash Noah. “But there also is a continued sense of unease and uncertainty about trade and growth prospects, and we’re seeing that in some of these more conservative forecasts.”
Hiring plans were a relatively bright spot this quarter. Some 43% of business executives said they had too few employees, compared to 38% last quarter. Of that group, 28% said they planned to hire immediately and 15% said they needed employees but were hesitant to hire.
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:
- The percentage of U.S. executives who expressed optimism about their own company’s prospects over the next 12 months remained unchanged at 58%, quarter over quarter.
- Survey respondents who said they expect their organizations to expand in the coming year fell two percentage points to 59% and has dropped 8% year over year.
- Availability of skilled personnel remains the top challenge for businesses, a position it has occupied since the third quarter of 2017.