New York (Dec. 6) -- The outlook for the U.S. economy improved in the fourth quarter, but broad pessimism about the progress of a recovery persists, according to the fourth quarter AICPA Economic Outlook Survey, which polls chief financial officers, controllers and certified public accountants in executive and senior management accounting roles.
The CPA Outlook Index--a composite of nine, equally weighted survey measures set on a scale from 0 to 100, with 50 signifying a neutral outlook--rose 6 points, to 64, this quarter, offsetting much of an 8-point decline in the third quarter. A good deal of the rise in the index can be attributed to growing optimism about the U.S. economy.
“We saw improvements in every category of the index, including sentiment about prospects for the U.S. economy,” said Carol Scott, AICPA vice president for business, industry and government. “However, serious concerns about the business climate remain, reflected by continued reticence for new investment and hiring.”
The percentage of respondents who expressed optimism about the U.S. economy rose from 9 percent to 19 percent since the last quarter. However, with 40 percent of survey takers still describing themselves as pessimistic or very pessimistic about domestic conditions, the outlook for the U.S. economy was the sole negative measure on the index. Uncertainty surrounding the U.S. economy was cited as the top challenge for business and industry going forward, followed by regulatory burdens and employee and benefit costs.
On the positive side, 59 percent of CPA executives said they expect their businesses to expand at least a bit in the next 12 months. And plans for spending on information technology, other capital expenditures and training are at their highest level since the third quarter of 2007. IT spending is projected to lead the pack with a 2.7 percent increase, and marketing expenses are also expected to pick up as businesses seek expansion opportunities.
“Executives are feeling better about their own company’s prospects than they are about the U.S. economy as a whole,” said Jim Morrison, chief financial officer of Teknor Apex Co. “But caution is still the word of the day for most businesses.”
Among other findings of the survey:
· Less than half (45 percent) of survey takers believe the economy is headed for a double-dip recession, down from 61 percent last quarter.
· Fifty percent said their organizations do not plan to return to pre-recession employment levels for at least 12 months, and a third do not expect to reach that level again in the foreseeable future. Yet one in four respondents reported their companies have too few employees, but remain reluctant to hire because of economic uncertainty.
· On a regional basis, survey takers have a more optimistic view of their company’s prospects than they did last quarter, with one exception—the Northeast. The Midwest has the sunniest outlook.
· Among industries, real estate and construction remain pockets of pessimism. Technology, manufacturing, retail trade and finance and insurance are sectors with the most optimistic outlooks.
· Asked which part of the President’s Job Council recommendations on job creation would benefit them most, 37 percent said “none,” the most common response to the question. The No. 2 answer was regulatory streamlining (22 percent).
The fourth quarter AICPA Business and Industry Outlook Survey was conducted Nov. 9-28 and included 916 qualified responses from CPAs who hold leadership positions, such as chief financial officers or controllers in their companies. The overall margin of error is less than plus-or-minus 3 percentage points. A copy of the full report can be found on aicpa.org.