Concerned about the outlook for both the U.S. and global economies, business executives have revised expectations downward for a number of categories that impact their companies, according to the second-quarter AICPA Economic Outlook Survey released last month, which polls chief executive officers, chief financial officers, controllers and other certified public accountants in U.S. companies who hold executive and senior management accounting roles.
Some 57 percent of survey takers expressed optimism about the U.S. economy’s outlook over the next 12 months, the third straight quarter it’s held at that level since dropping from 79% at the start of 2018. U.S. executives also continue to hold a dim view of the global economy, with only 35 percent expressing optimism, up a single percentage point from last quarter.
In recent quarters, business executives had kept a more upbeat view of expansion prospects and their own companies’ outlook. That sentiment has gradually eroded over the course of the year, however, and both categories now stand at their lowest level since late 2016. The same holds true for 12-month revenue and profit expectations, which slid this quarter from 4.4 percent to 4.2 percent and 3.6 percent to 3.1 percent, respectively.
“While business executives’ expectations for their companies and the perceived environment those companies will be operating in over the next year have been tracking downwards, there’s been a slight disconnect between these for the past few quarters” said Ash Noah, CPA, CGMA, managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants, the global organization that includes the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA). “In this quarter, we’ve seen a bit of a reset and the indicators are more closely aligned. With so much uncertainty over trade and other global issues, companies are taking a more conservative stance on their potential performance.”
Availability of skilled personnel remains the top challenge for businesses, a position it has occupied since the third quarter of 2017. Two other staffing-related issues are among the top five challenges cited by survey takers this quarter: employee and benefit costs (No. 2) and staff turnover (No. 5).
With a tight labor market, business executives forecast a 2.7 percent increase in salary and benefit costs over the next twelve months, a 0.1 percent increase over last quarter’s forecast. Asked for more specifics in a separate question, some 86 percent of respondents said they expected to raise salary and wages in the next 12 months, with most (64 percent) saying they expected those increases to fall between three and five percent. Only eight percent said they didn’t expect to raise salaries and wages at all. These numbers track closely with results from the last time the question was asked at the end of 2018.
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