The outlook for the U.S. economy among CPA business leaders has shown slight improvement. Nevertheless, concerns about inflation and tariffs remain pressing, according to the third quarter AICPA and CIMA Economic Outlook Survey.
In a survey involving 275 U.S.-based executives like CEOs, CFOs, and controllers, optimism is slowly on the rise. About 34% expressed hope for the U.S. economy’s direction over the coming year, up from the previous quarter’s 27%. Although this is still below the post-election high of 67%, it is above the 26% recorded at this time last year.
Uncertainty persists, particularly regarding inflation and tariffs. A notable 54% of executives are predicting a recession either in the current year or the next. This is a slight improvement from the 61% who believed so last quarter. Inflation has now overtaken “domestic economic conditions” as the primary concern among those surveyed.
Despite a reduction from 67% the previous quarter, a majority of 58% of executives still indicate significant uncertainty in business planning due to shifting tariff schedules.
- Raising Prices (30%)
- Reducing Operating Costs (24%)
- Exploring Different Supply Chain Options (23%)
Tom Hood, CPA, CGMA, CITP, executive vice president of business engagement at the Association of International Certified Professional Accountants, remarked on some positive signs. He highlighted pro-business measures like the enactment of H.R. 1 and friendlier regulatory policies under the current administration. However, “volatility in trade policy continues to pose challenges,” he notes. The effects of tariffs remain uncertain, meaning the next quarter could significantly influence economic sentiment.
Labour Trends and Revenue
The AICPA survey offers a forward-moving perspective, shedding light on hiring and business expectations for the next 12 months, contrasting the Labour Department’s backward-looking employment report.
- Hiring remains largely stable. Sixteen percent of executives are planning immediate new hires, a slight rise from last quarter. Conversely, 14% report having surplus staff, up from 12%.
- Revenue and profit growth expectations show modest improvements. Expected revenue growth for the next year is at 1.5%, consistent with last year, and a 0.5 percentage increase from last quarter. Profit expectations, previously negative, are projected to just above break-even at 0.1%.
- Thirty-seven percent of executives remain positive about their organisation’s prospects, unchanged from the previous quarter but down four percent from last year.
- The proportion of businesses expecting expansion in the next 12 months has increased by three percent to 46%.
- Besides inflation and domestic conditions, other significant concerns include employee and benefit costs, and materials and supply costs. Notably, “stagnating/declining markets” has moved up to seventh place in the list of priorities.
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