Dive Brief:
- Just over half of half of finance executives (54%) expect their businesses will continue to expand over the next year, with that confidence ticking down just one point from the previous quarter, according to a second quarter survey by the American Institute of Certified Public Accountants and the Chartered Institute of Management Accountants.
- At the same time, respondents’ pessimistic outlook on the broader U.S. economy dimmed, with over half of the respondents (51%) saying they believed the U.S. was already in a recession or will be in one by the end of the year. That’s up from 36% in the previous quarter, according to the survey conducted between May 5 and May 27.
- “Economic optimism is softening, particularly at the global level, while confidence in individual organizations continues to hold,” Tom Hood, AICPA’s executive vice president of business engagement and growth said in a statement in a press release. “That contrast reflects a business environment shaped by external uncertainty but supported by steady underlying fundamentals.”
Dive Insight:
The AICPA survey findings align with other projections that the U.S. economy will slow due to factors such as the war in Iran and rising inflation in the coming months. Last month, S&P Global forecast that the economy will likely struggle to grow at an annualized rate of much more than 1% in the second quarter.
Consumer prices jumped 4.2% in May according to data released by the Bureau of Labor Statistics on Wednesday — the highest level in three years — as a near-total blockade of oil shipments through the Strait of Hormuz pushed up energy prices, CFO Dive previously reported.
The latest AICPA report also found that nearly half (49%) of finance executives stated they were optimistic about their own organization’s prospects despite their dwindling optimism surrounding the U.S. economy’s prospects. Their economic optimism fell from 39% in Q1 to 32% in Q2, the survey of over 200 accountants in CEO, CFO, controller and other leadership positions found.
Some executives surveyed by AICPA believe the economy had strong underlying fundamentals and expected ongoing geopolitical issues would resolve. But those with pessimistic views were concerned about energy prices, continued inflation, and the ongoing geopolitical tensions, the report stated. Overall, optimism tied to the global economy dropped four points to 19%.
Employee and benefit costs were cited as the largest challenge facing companies to date this year, followed by inflation, including the increasing cost of raw materials. Overall, 81% indicated they were more concerned about inflation than deflation in regards to their business over the next six months,
Domestic political leadership, the availability of skilled personnel, high energy costs, cybersecurity concerns, regulatory requirements and domestic and global economic conditions were also cited among the top challenges.
The executives’ hiring outlook, meanwhile, remained relatively steady over the past quarter. Most companies, 55%, believe they have the right number of employees working at their company, a decrease of one point. Just 28% of business executives indicated they have too few employees — of those, 12% indicated they were hesitant to hire. The number of executives who believe they had too many employees increased two points to 13%, the report added.
