- Confidence among CFOs and accountants across North America plunged to a record low during the second quarter as inflation flared to a 40-year high and the Federal Reserve aggressively cut monetary stimulus, according to a survey by the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA).
- Tightening by the Fed “has started to undermine confidence and slow growth” in North America, the ACCA and IMA said, describing a survey of 949 CFOs and accountants worldwide. Respondents’ concern about operating costs hit a record high while supply shortages and supply chain disruptions persist as the No. 1 perceived risk.
- “Post-pandemic recovery has now given way to negligible economic growth, elevated inflation and extreme uncertainty,” according to Jamie Lyon, head of skills, sectors and technology at ACCA. “With the exception of the COVID recession of 2020, we expect global GDP growth this year and next will be the weakest since the global financial crisis of 2007-2009.”
CFOs re-calibrating wages, prices and investment need to vet an array of negative factors that have combined to cause what ACCA and IMA calls “a decisive deterioration in the global economic outlook.”
COVID-19 lockdowns have jarred exports and economic growth in China, the world’s second largest economy, while Russia’s invasion of Ukraine has pushed up the price of energy, grains and other commodities.
The U.S. economy has shown signs of flagging amid tight labor markets and the highest inflation since 1981. Among CFOs and accountants, “confidence collapsed in Q2 [the second quarter] and is now at a record low – even lower than during the COVID-19 pandemic,” ACCA and IMA said.
The International Monetary Fund (IMF) last week, noting the Fed’s efforts to quash high inflation, trimmed its estimate for U.S. economic growth this year to 2.3% from a 2.9% forecast last month.
“The policy priority must be to expeditiously slow price growth without precipitating a recession,” IMF executive directors said in a statement.
CFOs and accountants were not completely gloomy about prospects for the U.S. economy, noting a strong labor market, ACCA and IMA said. “The employment index remains well above its long run average and the jobs market is an area of strength, with employment growth continuing apace.
Although the pandemic persists, ACCA and IMA said CFOs and accountants see it as less of a threat than more recent risks. Since the first quarter survey, “the most notable change is the fall in concerns about COVID and increase in perceived risks related to inflation and rising interest rates.”