According to the fourth quarter, about 51% of business executives believe the US economy is already in recession or will recession by the turn of the year. AICPA & CIMA Economic Outlook SurveyThe survey is for US corporate chief executive officers, chief financial officers, controllers, and other certified public accountants in executive and senior management accounting roles.
Only 12% of business executives expressed optimism about the US economy over the next 12 months. This is the lowest level since the Great Recession woes in early 2009. That’s compared to 18% last quarter and 41% a year ago. Inflation, higher interest rates and higher energy costs were cited as the main reasons for the pessimistic outlook.
One of the big challenges for finance teams in recent quarters is uncertainty. One in four of his survey respondents said his organization made more forecasts than during the pandemic economy. Nearly a third say they continue to level up their forecasts from that point on.
Beyond the frequency of forecasting, more than one in four executives say forecasting has become significantly more complex in the past year, with another 37% saying it has become slightly more complex. The main factors are uncertainties regarding pricing issues, supply chain reliability, labor costs and changes in consumer demand.
Tom Hood, CPA, CITP, CGMA, AICPA and CIMA, said: President of Business Engagement and Growth. “We expect this pace to remain strong as companies grapple with cash flow over the next few quarters.”
The main pressure points for CFOs grappling with heavier workloads are the staffing of finance teams and the digital transformation of finance work streams, Hood said.
The AICPA survey is a forward-looking indicator that tracks employment and business-related expectations over the next 12 months. In contrast, his November jobs report from the US Department of Labor, due out tomorrow, looks back at the last month’s employment trends.
Other key findings of the study:
- When it comes to hiring, 34% of executives say their organizations are looking to fill roles quickly, similar to last quarter. Eight percent said they had too many employees, up from 5 percent last quarter.
- Earnings expectations for the next 12 months have slipped into negative territory (down -0.2%), down from zero growth expectations in the previous quarter. Earnings growth forecasts also declined quarter-on-quarter to 2.1% from 2.6%.
- Executive optimism about their company’s prospects over the next 12 months fell another 6 percentage points from 41% to just 35%.
- Forty-five percent of business executives say their company has increased its cash position in the past 12 months, and 14% say they have significantly raised cash on hand.
- US business executives’ outlook for the global economy over the next 12 months also fell to 7% from 9% the previous quarter.
- Inflation was the top concern for business executives for the fifth straight quarter. Other top challenges included “employee and benefits costs” and “availability of skilled manpower.”
- The proportion of business executives who plan to expand their business decreased by 3 percentage points from 49% to 47% quarter-on-quarter.