As the full scope of the economic swath cut by the COVID-19 pandemic begins to emerge, a new survey of CEOs, CFOs, controllers and other CPAs in U.S. companies paints an ugly picture of the road ahead.
Only 20% of respondents in the second-quarter AICPA Economic Outlook Survey expressed optimism about the overall outlook for the U.S. economy over the coming year, down from 61% in the first quarter and now at its lowest level since late 2011. Meanwhile, as companies have cut their profit and sales outlooks in response to pandemic-related impacts, executives now expect revenue to contract by 5% over the next 12 months (down from an anticipated 4.3% growth rate last quarter) and profit to drop by 5.5% (down from an anticipated 3.3% growth rate). In addition, while less than 8% of business executives said their companies had made downward adjustments to their forecasts in light of the pandemic in the first-quarter survey, 81% had done so this time.
Adding to the parade of dire news, the percentage of U.S. executives expressing optimism about their own company’s prospects over the next 12 months fell from 66% to 30%, quarter over quarter, while respondents who said they expect their organizations to expand in the coming year dropped from 64% last quarter to 24%. In terms of top pandemic-specific concerns, respondents cited customer demand/ability to pay, the safety of employees and cash, financing and capital challenges.
“Not surprisingly, this quarter’s survey documents the severe impact the pandemic has had on the outlook for U.S. businesses,” says Ash Noah, AICPA managing director of CGMA learning, education and development. “Moving forward, the reopening or ramping up phases in different states will be critical but the rise of liquidity concerns and the uncertain social and economic environment, including potential second-wave infections and prospects of additional layoffs, continue to present an extremely challenging environment for businesses.”