Inflation worries, a tight labor market and fallout from the ongoing war in Ukraine have dropped business executives’ view of U.S. economic prospects to its lowest level since 2011, according to the latest AICPA Economic Outlook Survey.
The second-quarter edition of the poll surveyed 549 CPAs who hold leadership positions during the period of April 26 to May 20, with just 18% of respondents expressing optimism about the U.S. economy over the coming 12 months, down from 36% three months ago and lower than even the 20% registered at the onset of the pandemic two years ago. Some 97% of survey respondents said there was at least some risk of recession within the next 12 months, with 1 in 4 calling it a significant possibility.
Inflation remains the top concern of business executives for the third straight quarter, with labor costs seen as the main driver. Salary and benefit costs are now expected to increase at a rate of 4.4%, higher than at any time since before the Great Recession. Energy costs and interest rate hikes are also rising contributors to inflationary pressures, executives say.
“We’re still seeing residual stresses on supply chains from the pandemic and that’s now been coupled with the impact of sanctions and business wind-downs involving Russia,” says Tom Hood, executive vice president of business engagement and growth for the AICPA. “Those global dislocations, a volatile pricing and cost environment, and the continuing impact of workplace shifts such as the Great Resignation are putting a lot of pressure on businesses and their finance teams.”
Among the other key findings in this edition of the survey:
- Most respondents are now pessimistic about their own organizations’ prospects over the next 12 months, with optimism levels in this area falling from 58% to 47%, quarter over quarter.
- Forty percent of executives said their organizations are looking to fill roles immediately, while another 16% said they had too few employees but are hesitant to hire.
- The percentage of respondents who said their companies plan to expand over the next 12 months fell from 62% last quarter to 53% this time.