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More CPA Executives Are Optimistic about the US Economy

Apr 10th 2012
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By Anne Rosivach

A growing number of financial executives are optimistic about prospects for the US economy and their own organizations over the next twelve months, according to the first quarter AICPA Business and Industry Economic Outlook Survey. The survey was conducted from February 15 to March 1 and included 1,358 qualified responses from CPAs who hold leadership positions, such as CFOs and controllers, in their companies. Respondents were asked for their:

  • View of the prospects for the US economy and their own organization in the next twelve months.
  • Future hiring plans.
  • Expectations for growth in spending on marketing and training as well as for other anticipated changes in business spending.

Although each of the nine components of the CPA Outlook Index (CPAOI) rose slightly in the first quarter, the fastest-rising element of the index was optimism about the US economy, which jumped from 40 points to 61. It had fallen to as low as 25 points in the third quarter of 2011.

"Optimists now outnumber pessimists on the US economy by an almost two-to-one margin, which is a striking change from six months ago", said Carol Scott, AICPA vice president for business, industry, and government. "While a substantial number of respondents remain neutral, we are seeing a clear shift toward a more positive outlook for the coming year." The CPA executives surveyed are more optimistic about the outlook for their organizations, with 55 percent saying that they expect better things to come compared with 45 percent last quarter.

Key Performance Areas

In comparison to 2011, survey responses in key performance areas showed that:

  • Expectations for revenue and profit increases improved for the second consecutive quarter.
  • Staffing expectations also improved slightly but remain low, with an increase of only 1.5 percent. The technology sector is expected to add the most jobs over the next twelve months. Health care providers, such as hospitals and nursing homes, are projected to add the least.
  • Expectations for pricing and cost increases remain stable. Respondents continue to expect the prices they pay to increase more than what they charge, but the gap closed this quarter to .7 percent, the smallest amount since second quarter 2009.
  • Expectations for increases in salary and benefits costs remained stable.
  • Expectations for health care costs increased slightly, from 6.0 percent to 6.2 percent.
  • Spending plans are generally stable.


Respondents remain reluctant to deploy capital. The majority of the respondents' organizations continue to have at least as much cash as they need, with 34 percent saying they have more than they need, and 44 percent saying they have about the right amount. Fifty-six percent of respondents say they expect credit availability to remain about the same.

Top Challenges

The top three challenges respondents expect to face in 2012 are unchanged from the last quarter. They are:

  • Domestic economic conditions
  • Regulatory requirements/changes
  • Employee and benefits costs

The fourth, fifth, and six challenges also remained the same; however, their rankings changed: 

  • Domestic competition (moved from fifth to fourth)
  • Domestic political leadership (moved from sixth to fifth)
  • Stagnant markets/declining markets (moved to fourth to sixth)

Industry Optimism, Staffing, and Expansion

Optimism:The "health care other" sector (pharmaceutical, medical device suppliers, etc.) saw the largest increase in optimism and is the most optimistic this quarter. It is followed by the technology, finance and insurance, and manufacturing industries. Health care providers replace those in the real estate industry as the most pessimistic.  

Regionally, the Midwest continued to have the highest level of optimism for economic growth (60 percent). Optimism for all regions exceeded 50 percent.

Staffing:Technology, health care other, and manufacturing expect to do the most hiring. No industry plans to reduce staffing.  

Expansion: Smaller businesses continue to lag behind larger ones in their expectations for expansion.

Monetary and Fiscal Policy

In the first quarter CPA executive survey within a survey of fiscal and monetary policy:  

  • Seventy percent said the federal government should not initiate another round of quantitative easing, 11 percent support another round of quantitative easing, and 18 percent are unsure.
  • Sixty-four percent said an extension of "Bush era" tax cuts would increase their optimism, 18 percent said it would decrease it, and 18 percent said it would do neither.
  • Forty-three percent felt that the repeal of the sequestration cuts would decrease optimism, 21 percent felt it would increase their optimism, and 36 percent said it would do neither.
  • Eighty-nine percent said there was less than a 25 percent chance that any meaningful economic policy action would come out of Washington this year.

The AICPA Business and Industry Economic Outlook Survey is conducted quarterly and has a track record of accurately forecasting the direction of the US economy. According to an AICPA press release, CPAs serving as CEOs, CFOs, and controllers in their organizations clearly signaled the United States was in a recession in 2008, at a time when there was still substantial debate among economists and market watchers on the topic.

You can access the entire report on the AICPA website.

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