Economic optimism down among executives

In the latest Business and Industry Economic Outlook survey, released Sept. 5, 54 percent of respondents expressed opinions ranging from neutral to very pessimistic in regard to the national economy. That’s up from 41 percent who had such opinions in December, the last time the AICPA conducted an economic outlook survey.

A total of 2,571 CPAs from companies of various sizes participated in the survey, which was conducted in June. The majority – 60 percent – of the respondents work for privately held companies.

Most of the executives – 68 percent – indicated that they are confident about the prospects for their own companies.

In fact, 58 percent project moderate to substantial growth by the end of 2006. Another positive sign: Spending, particularly for information technology and new product development, is expected to remain strong.

The polled CPAs indicated, however, that growth, for the most part, will not stem from U.S. markets. Fewer companies, primarily those with more than $100 million in annual revenues, expect increased growth from the U.S. sector.

“The lack of enthusiasm for the state of the economy among these CPA executives seems to mirror that of consumers in general,” said John Morrow, AICPA vice president for members in business and industry, in a news release. “According to a Conference Board survey, consumer confidence in the economy sank to a nine-month low in August.”

Areas of concern

Of the CPA executives surveyed, 39 percent said their companies will beef up their work forces over the next six months, down from 45 percent who said the same in December.

Twenty-one percent of those who work for the largest companies (more than $1 billion in annual revenues) anticipate work-force reductions in the second half of 2006, compared with 17 percent in December.

CPAs continue to be concerned about the impact that changes in short-term interest rates will have on inflation, with three-quarters of the survey sample saying they were more worried about the impact on inflation than on economic growth.

Respondents identified costs associated with employees, energy, and materials and supplies as issues they are most concerned about, which is consistent with the results of the December survey.

AICPA has 330,000 members, including CPAs in business and industry, public practice, government and education.