Survey: CPA executives dour on prospects for U.S. economy

CNY Business Journal (1996+), Mar 21, 2008

Senior-level executive CPAs' expectations for the U.S. economy have turned sharply negative, according to a new industry group survey.

The decline in confidence comes as the outlook for finance,, real estate, and retail trade declined in the fast quarter, according to the latest Business and Industry Economic Outlook Survey of the American Institute of Certified Public Accountants (AICPA) and the University of North Carolina's Kenan-Flagler Business School.

For the first time since the AICPA survey began in December 2005, pessimists outnumbered optimists and did so by nearly a 5-to-1 margin. The economy emerged as the top issue facing lawmakers and U.S. presidential candidates.

A 59 percent majority of CPA respondents said they were pessimistic or very pessimistic about the economic outlook for the U.S. over the next 12 months. Meanwhile, the new survey found only 11 percent of CPAs in executive positions expressed optimism about the economy.

"This is a strong signal from CPA financial executives serving in business and industry that they think the U.S. economy is slowing down," says Arleen Thomas, senior vice president of the AICPA. "At the same time, CPAs express more confidence in their own businesses, suggesting the downturn may not be as deep as some may fear."

Forty-six percent of executive CPAs said they were optimistic or very optimistic about their organization's economic prospects over the next 12 months, while 21 percent said they were pessimistic or very pessimistic. Most organizations still expect some growth in revenue, profits, and employment.

"The good news is that executives anticipate increases in revenues, net income, and employment for their firms in the next 12 months," says Mark Lang, Ph.D., a professor of accounting at the Kenan-Flagler Business School.

"The bad news is that they expect a downturn for the economy as a whole. In the end, the implications for the U.S. economy depend on which assessment is more accurate," Lang added.

A 57 percent majority said the economic-stimulus package passed by Congress was necessary to forestall a recession. Asked to identify the top three issues facing U.S. policymakers in this election year, a third of respondents named economic growth, energy prices, and the value of the U.S. dollar as key concerns.

More than 1,500 senior-level executives CPAs responded to the latest Business and Industry Economic Outlook Surrey conducted via an online questionnaire Jan. 18 to Feb. 10. The margin of error was plus-or-minus 3 percentage points.

CPAs who hold leadership positions as chief executives, chief operating officers, chief financial officers, or controllers hold well-informed expectations for both the U.S. economy and their organizations.

AICPA is the national, professional association of CPAs, with more than 350,000 members.