The survey polls chief executive officers, chief financial officers, controllers and other certified public accountants in US companies who hold executive and senior management accounting roles.
Some 26% of business executives said they were optimistic about the economy’s prospects over the next 12 months, down from 35% last quarter and 29% a year ago. Those expressing optimism about the global economy also fell slightly from 22% to 19%, quarter over quarter.
“Election years are always a volatile period and signals from the economy have been mixed lately,” said Tom Hood, AICPA & CIMA’s executive vice president for business engagement and growth. “There’s less worry about inflationary pressures and we have the likelihood of interest rate cuts by the Federal Reserve. But geopolitical concerns continue to weigh on global commerce, we’ve seen downward revisions to strong US job growth figures and many business leaders are concerned about rising labour costs, which is making the hiring outlook worse than it had been earlier this year.”
Some 57% of business executives said they were worried about inflation over the next six months, down sharply from 75% last quarter. Inflation, the top concern listed within the survey over the past three quarters, fell to number two this quarter behind employee and benefit costs.
The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. In comparison, the US Department of Labor’s August employment report, scheduled for release tomorrow, looks back on the previous month’s hiring trends.
Other key findings of the survey:
- Revenue and profit expectations for the next 12 months both fell. Revenue growth is now expected to be 1.9%, down from a 2.9% projection last quarter. Profit projections fell from 1.5% last quarter to 0.2%.
- Business executives who said they were optimistic about their own organization’s outlook over the next 12 months fell from 48% to 41%, quarter over quarter.
- Only 44% of survey respondents expect their businesses to expand over the next 12 months, down from 53% last quarter. The percentage of those who foresee a contraction rose seven points to 27%.
- 69% of business executives said an anticipated interest rate cut would have at least a moderately favourable impact on their business, with almost 1-in-5 saying it would be very favourable. The downside: it could impact investment portfolios.
- 54% of respondents said the election uncertainty has had limited or no impact on their business forecasting. 12% said it had had a significant impact on forecasting, and 34% said it had a moderate impact. Revenue projection was most likely to be impacted.
- Some 13% of business executives said they had too many employees, up two percentage points from last quarter. Those who said they had too few employees remained steady at 29%, but the percentage of those who were hesitant to hire despite being shorthanded rose from 13% to 15%, quarter over quarter.
Methodology
The third-quarter AICPA & CIMA Economic Outlook Survey was conducted from Aug. 6-27, 2024, and included 310 qualified responses from CPAs and Chartered Global Management Accountants (CGMAs) who hold leadership positions, such as chief financial officer or controller, in their companies. The overall margin of error is less than three percentage points. A copy of the report can be found on aicpa.org.
