Business Executives Take More Favorable View of U.S. Economy

Business executives’ optimism about the U.S. economy now stands at its highest point since early 2007, although lingering concerns continue to curtail hiring plans, according to the second quarter AICPA Economic Outlook Survey, 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 three out of five companies are now expecting to expand over the next 12 months.”

While less than half of respondents (49 percent) describe themselves as optimistic or very optimistic about U.S. economic prospects, that’s up from almost a third (32 percent) at the start of the year. Consumer spending and more favorable housing and employment trends were cited as factors for the improving view of domestic conditions. For comparison’s sake, the low point for this category came in the third quarter of 2011, when only nine percent of executives described themselves as optimistic.

The CPA Outlook Index—a comprehensive gauge of executive sentiment within the survey— rose three points to 69 for the quarter, matching a post-recession high last reached in the first quarter of 2012.

The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and greater numbers signifying positive sentiment. For the second straight quarter, all components of the index rose, with U.S. economic optimism the sole double-digit climber.

“In addition to holding a more optimistic view of the economy, executives are feeling much better about their own business prospects,” said Arleen R. Thomas, CPA, CGMA, the AICPA’s senior vice president for management accounting and global markets. “Some three out of five companies are now expecting to expand over the next 12 months.”

Executives who said they were optimistic about their company’s prospects increased from 50 percent to 57 percent, quarter over quarter—the highest level for this category since the first quarter of 2011. Yet hiring plans remain limited, with survey takers only projecting headcount growth of one percent over the next year, down slightly from last quarter.

Other findings of the survey include:

• Key Performance Indicators – Profit and revenue expectations continue to track upwards, albeit at a modest pace.
• Hiring – Some 57 percent of business executives say their companies have the right number of employees. Twelve percent said they plan to hire soon, the same as last quarter. The construction and technology sectors are expected to see the biggest job growth.
• Top Challenges – “Regulatory requirements/changes” has replaced “Domestic economic conditions” as the top challenge for organizations. Rounding out the Top 3 is “Employee and benefit costs.”

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