The Economy

Economic Optimism Rebounds From 3-Year Low

Nineteen percent of business executives surveyed by the AICPA say their organizations are ready to hire immediately, up from 15% last quarter.
Matthew HellerJune 3, 2016

Business executives’ sentiment about the growth prospects for the U.S. economy has rebounded after two relatively gloomy quarters, according to the second-quarter AICPA Economic Outlook Survey.

More than one-third (37%) of survey respondents expressed optimism about their organization’s anticipated performance for the coming year, up from a three-year low of 28% last quarter. Also pointing upward were profit and revenue expectations, AICPA said.

The American Institute of CPAs polls chief executive officers, CFOs, controllers, and other certified public accountants in U.S. companies who hold executive and senior management accounting roles.

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But optimism is still well short of the 68% level reported in the first quarter of 2015. “The good news is the slide in sentiment about the U.S. economy has reversed course and key performance indicators are pointing back up,” Arleen R. Thomas, AICPA’s senior vice president of management accounting and global markets, said in a news release.

“But there’s a long way to go to get back to the levels of optimism we saw in late 2014 and early 2015,” she added. “On top of that, the presidential election and global economic uncertainty add some wild cards going forward.”

One bright spot in the second quarter was hiring outlook, with 19% of business executives saying their organizations are ready to hire immediately, up from 15% last quarter. The percentage of executives who say their company needs employees but are reluctant to hire also increased from 16% last quarter to 18%.

The CPA Outlook Index — a comprehensive gauge of executive sentiment within the AICPA survey — rose five points in the second quarter, but still remains well below the post-recession high of 78 set in the fourth quarter of 2014. The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and higher numbers signifying positive sentiment.

Expectations for increased revenues recovered to 3% after falling off to only 1.7% in the first quarter of 2016, while expectations for profits for the coming year also rebounded to 1.5% after dropping to only 0.7% in the first quarter.

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