AICPA Economic Outlook Survey: Second Quarter Results
By Terri Eyden
- There's an overall 9 percent drop this quarter.
- 34 percent describe themselves as optimistic or very optimistic about domestic conditions, down from 43 percent.
- Optimists most frequently mention improved unemployment, the housing market, and generally improving economic indicators.
- Pessimists are most concerned about debt and continued unemployment.
- Respondents who are neutral pointed to the upcoming elections, politics, the situation in Europe, and uncertainty in general.
- 54 percent continue to feel upbeat about prospects for their own companies or organizations.
- 13 percent express pessimism.
- 33 percent of respondents are concerned about inflation, down from 37 percent last quarter.
- Concerns about energy costs dropped, while concerns about interest rates rose to the highest level in a year.
- Respondents remain most concerned about raw material costs.
- 61 percent of senior-level CPAs said they expect their companies to expand over the next twelve months, a number unchanged from the first quarter.
- 62 percent of businesses with more than $1 billion in sales said they plan to expand, down from 65 percent last quarter.
- 56 percent said they have the right number of employees.
- 10 percent said they have too many employees.
- 12 percent said they plan to hire soon, compared to 14 percent last quarter.
- 50 percent who are eager to hire said they are having trouble finding job candidates with the right skills.
- 21 percent said they need people but are hesitating to hire until further uncertainty is resolved.
- Overall, the total percentage of organizations needing employees remains stable, leaving long-term prospects unchanged.
Revenues, Profits, and Spending:
- Respondents expect revenue to grow an average of 3.1 percent, down from 3.5 percent last quarter.
- Profits are expected to increase 2.6 percent, down from 2.9 percent last quarter.
- Prices paid are expected to increase by 1.9 percent, down from 2.1 percent.
- Prices charged are anticipated to increase by 1.2 percent, down .2 percent from last quarter.
- Expectations for salary increases remain stable this quarter at 2.0 percent.
- Respondents still expect to increase spending, but those increases remain small.
- Respondents continue to expect to increase IT spending by 2.8 percent and other capital spending by 2.0 percent, about the same as last quarter.
- Training spending is expected to increase 1.2 percent, down from 1.4 percent last quarter.
- Marketing spending is expected to increase 1.5 percent, down from 1.8 percent.
- R&D spending is expected to increase 1.0 percent, down from 1.2 percent last quarter.
Top Ten Challenges:
- Domestic economic conditions (same as last quarter).
- Regulatory requirements/changes (same as last quarter).
- Employee and benefit costs (same as last quarter).
- Domestic political leadership (moved up from fifth).
- Domestic competition (moved down from fourth).
- Stagnant/declining markets (remained in sixth place).
- Global economic conditions (moved up from tenth).
- Availability of skilled personnel (moved up from ninth).
- Developing new products/services/markets (moved down from seventh).
- Materials/supplies/equipment costs (moved down from eighth).