The Economy

62% of Execs See Business Growth in Next Year

The AICPA finds economic optimism has stabilized, with profit expectations and employment also showing strength in the third quarter.
Matthew HellerSeptember 2, 2016

Nearly two-thirds of business executives forecast their companies will expand in the next 12 months while optimism about the U.S. economy has stabilized since the beginning of the year, according to the third-quarter AICPA Economic Outlook Survey.

Profit expectations, employment, and training and development spending also showed strength in the latest quarter, although expectations for revenue growth eased a point to 2.9% after rebounding from 1.7% in the first quarter to 3.0% in the second.

At 62%, the percentage of executives expecting business expansion over the next year was the highest rate since the first quarter of 2015. The number of executives who are optimistic about the economy increased from 37% to 38% in the third quarter after declining to 28% in the first quarter.

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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.

“We’re seeing some stability in optimism about the U.S. economy after a few volatile quarters,” Arleen R. Thomas, the AICPA’s senior vice president of management accounting and global markets, said in a news release.

“The response by businesses has been variable, though, depending on the size of the company and the industry it’s in,” she added. “Some are ready to add new staff and make other investments, while others are taking a more cautious stance.”

The survey’s CPA Outlook Index of economic optimism rose one point in the third quarter to 69, but is still well below the post-recession high of 78 reached in the fourth quarter of 2014. Organization optimism was unchanged at 68.

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.

Survey respondents now expect profits to rise 2.6% over the next 12 months, or more than three times the rate projected at the start of the year. Some 70% say they expect revenue to increase in the coming year.

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