According to the latest first-quarter survey of the AICPA and CIMA Economic Outlook, US business leaders still have significant concerns about the economy, but there has been a significant increase in optimism regarding revenue and profit expectations and other key performance indicators for the coming year.
This survey collected responses from chief executive officers, chief financial officers, controllers and other certified public accountants who hold executive and senior management accounting positions in US companies.
Although progress has been made, with 23% of business executives expressing optimism about the outlook for the US economy over the next 12 months, there are still many concerns.
Only 12% were optimistic in the previous quarter, which is less than in 2009. was the lowest level since inception. Factors such as inflation, rising interest rates and geopolitical concerns continue to weigh heavily on the US outlook. In addition, 90% of respondents expressed concern about the potential effects of the recession, with 15% of respondents indicating that they were significantly concerned.
The survey shows that business leaders are more optimistic about their companies’ financial performance despite these concerns. The results show that many expect incomes and profits to increase in the coming year, which is a positive sign for the US economy.
There are several positive indicators in this quarter.
Business leaders expect a flat 0.6% profit growth over the next 12 months, a significant improvement from forecasts of negative or zero growth in the past two quarters. Additionally, forecasts for 12-month earnings growth rose to 2.6% from 2.1% expected in the previous quarter.
What’s more, the number of business executives who express optimism about their own organizations’ prospects over the next 12 months rose from 35% to 47% in the quarter. This positive trend shows that business leaders are more confident in their companies’ ability to withstand economic uncertainties.
In addition, more business leaders expect their companies to expand at least somewhat over the next 12 months, with 52% of respondents citing expansion plans, compared to 47% in the previous quarter. Among businesses with more than $1 billion in revenue, the proportion expecting to expand is even higher, with 68% indicating plans to expand.
The survey also revealed other important findings.
US business leaders’ outlook for the global economy over the next 12 months improved, with the proportion expressing pessimism falling to 48% from 72% in the previous quarter.
For the sixth consecutive quarter, inflation remains a top concern for business leaders. However, the challenges ‘Availability of Skilled Staff’ and ‘Employee and Benefit Costs’ have changed and are now the second and third most important challenges, respectively.
“Although hiring demands may cool down a bit, we don’t see widespread layoffs. most companies are looking for interim strategies to protect their workforce options. In fact, one-third of business leaders say they are looking to hire immediately, while ‘availability of skilled staff’ continues to be a top concern in the survey.” said Tom Hood, AICPA & CIMA Executive Vice President of Business Engagement and Growth.
“This highlights the unique pressures companies have faced over the past year with so much uncertainty undermining financial modelling.”
the full report can be downloaded from the link below: https://www.aicpa.org/professional-insights/download/1q2023-aicpa-business-and-industry-economic-outlook-survey
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