Key Takeaways

  • A second-quarter survey released by the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) found that slightly more than half (54%) of finance executives expect their companies to continue expanding over the next year, a confidence level just 1 percentage point lower than the previous quarter.
  • At the same time, respondents' pessimism about the overall U.S. economic outlook deepened: 51% of respondents believe the U.S. economy is already in a recession or will fall into one by the end of the year, up significantly from 36% in the previous quarter. The survey was conducted from May 5 to May 27.
  • "Economic optimism is waning, especially at the global level, while confidence in their own organizations remains solid," said Tom Hood, executive vice president of business engagement and growth at AICPA, in a press release. "This contrast reflects that the business environment is affected by external uncertainties, but fundamentals remain sound."(Source)

Dive Insight

The AICPA findings align with other forecasts that the U.S. economy will slow due to factors such as the war in Iran and rising inflation in the coming months. Last month,S&P Global forecastthat second-quarter economic growth on an annualized basis could struggle to exceed 1%.

Data released by the U.S. Bureau of Labor Statistics on Wednesday showed thatconsumer prices rose 4.2% year over year in May, the highest level in three years, driven mainly by energy prices surging due to the near-total blockade of oil shipments through the Strait of Hormuz, as CFO Dive previously reported.

The latest AICPA report also found that nearly half (49%) of finance executives are optimistic about their own organizations' prospects, even as their optimism about the U.S. economy continues to decline. The survey showed respondents' economic optimism fell from 39% in the first quarter to 32% in the second quarter. The survey covered more than 200 accountants serving as CEOs, CFOs, controllers, and other leadership roles.

Some executives surveyed believe the U.S. economy is fundamentally strong and expect ongoing geopolitical issues to be resolved. But those with a pessimistic view worry about energy prices, persistent inflation, and geopolitical tensions. Overall, optimism about the global economy fell 4 percentage points to 19%, the report said.

Employee and benefits costs were cited as the biggest challenge facing companies so far this year, followed by inflation (including rising raw material costs). Overall, 81% of respondents said they are more concerned about inflation than deflation over the next six months.

Domestic political leadership, availability of skilled talent, high energy costs, cybersecurity concerns, regulatory requirements, and domestic and international economic conditions were also cited as major challenges.

Meanwhile, executives' hiring outlook remained relatively stable over the past quarter. Most companies (55%) believe their current staffing levels are appropriate, down 1 percentage point from the previous quarter. Only 28% of executives said they are understaffed, with 12% saying they are cautious about hiring. The proportion of executives who believe they are overstaffed rose 2 percentage points to 13%, the report added.