Business executives’ confidence in US economy wanes
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Business executives’ confidence in US economy wanes
A new survey has revealed that confidence among business leaders regarding the US economy has significantly diminished. Fears of a potential recession and the effects of tariffs have played a significant role in this drop in optimism. One in five executives believe the US is already undergoing a contraction in the business cycle, while 34% expect one to occur by the end of the year. 32% of executives are increasing prices, while 31% are investigating alternative supply chain options. 26% are seeking to cut operating costs as a precautionary measure. The AICPA survey acts as a forward-looking indicator of hiring and business expectations for the forthcoming year.
A new survey has revealed that confidence among business leaders regarding the US economy has significantly diminished due to various factors.
According to the second-quarter AICPA and CIMA Economic Outlook Survey, fears of a potential recession and the effects of tariffs have played a significant role in this drop in optimism.
The survey targets chief executive officers, chief financial officers, controllers, and other senior management accountants, showing that merely 27% of executives currently hold a positive view of the economy.
This represents a sharp decline from 47% in the previous quarter and 67% at the conclusion of 2024.
Ongoing inflation and the erratic application of tariffs have intensified worries about an economic downturn, according to the survey report.
One in five executives believe the US is already undergoing a contraction in the business cycle, while 34% expect one to occur by the end of the year.
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Among those anticipating a recession, 75% foresee it being moderate to severe. Additionally, two-thirds of executives report considerable uncertainty in business planning due to fluctuating tariff schedules, an increase from 49% last quarter.
In light of these challenges, 32% of executives are increasing prices, while 31% are investigating alternative supply chain options.
Furthermore, 26% are seeking to cut operating costs as a precautionary measure.
The AICPA survey acts as a forward-looking indicator of hiring and business expectations for the forthcoming year.
In contrast, the US Department of Labor’s employment report examines past hiring patterns.
Key findings suggest a tightening in recruitment, with only 14% of executives actively looking to hire new staff, down from 20% last quarter.
Additionally, 12% indicated they have an excess of employees, an increase from 8% previously.
Projected revenue growth for the next year stands at a mere 1%, the lowest level since the third quarter of 2020. Profit expectations have also turned negative, falling to -0.3% from +1.7% in the previous quarter.
Only 37% of executives express a positive outlook regarding their own organisation’s prospects for the coming year, a decrease from 50% in the last quarter. The proportion of those anticipating business expansion has also dropped from 57% to 43%.
This quarter, “domestic economic conditions” has emerged as the foremost concern for executives, overtaking inflation, which was previously the primary issue.
The survey gathered 328 qualified responses from CPAs and CGMAs in leadership positions.
Source: https://www.theaccountant-online.com/news/business-executives-confidence-in-us/