It’s been a pattern since the end of 2022: Executive optimism about the U.S. economy drops one quarter, rises the next, then drops again the quarter after that.
The same trend persisted in the second quarter AICPA/CIMA Economic Outlook Survey, with respondents now more pessimistic about the economic outlook after a strong rebound in sentiment last quarter. The survey is conducted among CEOs, CFOs, controllers and other certified public accountants who hold C-suite or senior management accounting roles at U.S. companies.
About 35% of business executives say they are optimistic about the economic outlook over the next 12 months, down from 43% last quarter. While the overall trend over the past year has been positive, with only 14% being optimistic a year ago, the graph for the past year (and the year before) has consistently zigzagged from quarter to quarter.
“The latest results show conflicting signals,” says Tom Hood, executive vice president, business engagement and growth, AICPA & CIMA. “On the one hand, inflation concerns are about the same as a year ago, but over the past year concerns have declined and have steadily risen since, meaning there is a perception that things are getting worse. On the other hand, revenue and profit expectations have trended upward in recent quarters, indicating underlying strength in the economy. Our observation is that a mix of confusing or contradictory statistics is driving this continued sideways movement across these indicators.”
Another source of uncertainty is that this is an election year: executives’ top three concerns — inflation, employee and benefit costs, and availability of skilled talent — remain unchanged from the previous quarter, while “national political leadership” jumps three places to fourth.
The hiring outlook remains strong but is showing signs of weakening: About 29% of executives say their workforce is too small, 16% say they are looking to hire soon, and 13% say uncertainty is holding them back from hiring. This is a shift from the previous quarter, when 37% of respondents said their workforce is too small and 22% said they are looking to hire soon.
