Business Executives Take Less Dire View of U.S. Economy

Business executives are significantly less pessimistic about the U.S. economy and their own businesses’ prospects than they were at the end of 2012, according to the first 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.

“But a solid majority of survey takers now expect to see their business expand in the coming year, and we’re seeing a slight uptick in hiring plans.”

The CPA Outlook Index--a comprehensive gauge of executive sentiment within the survey— rose seven points to 66 for the quarter. That’s the largest quarterly jump in more than two years, but the index is still below its post-recession high of 69, last reached a year ago.

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. This quarter all components of the index rose -- a stark contrast to last quarter, when each element fell.

“Corporate executives are still concerned about unemployment levels, deficit and debt issues, and political gridlock,” said Arleen R. Thomas, CPA, CGMA, the AICPA’s senior vice president for management accounting and global markets. “But a solid majority of survey takers now expect to see their business expand in the coming year, and we’re seeing a slight uptick in hiring plans.”

The biggest change this quarter involves the outlook for the U.S. economy, where survey takers have collectively shifted from a pessimistic to a neutral stance. The number of business executives who expressed a pessimistic view fell from 49 percent to 31 percent, quarter over quarter. Yet only 32 percent said they were optimistic, with the rest falling in the middle.

Executives feel better about their own businesses – half now express optimism, up from 41 percent in the past quarter.

Other findings of the survey include:

• Key Performance Indicators – After a progressively downward slide through 2012, expectations for revenue, profits and headcount growth rebounded in the first quarter of 2013.
• Hiring – Some 54 percent of business executives say their companies have the right number of employees. Twelve percent said they plan to hire soon, up from 8 percent in the past quarter.
• Top Challenges – “Employee and benefit cost concerns” has replaced “Domestic political leadership” as the No. 3 concern from the past quarter. The top three concerns now are: 1) Domestic economic conditions, 2) Regulatory requirements/changes and 3) Employee and benefit cost concerns.

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