Economic Outlook Survey

Business Executives Show Concern About U.S. Economy but Confidence in Own Companies

Survey: Almost half of respondents say their companies will boost pay because of tight labor market
Availability of skilled personnel is top challenge for sixth quarter in a row

December 06, 2018 — NEW YORK–(BUSINESS WIRE)–Business executives’ outlook on the U.S. economy fell sharply in the past quarter, but they continue to hold strongly positive views of their own companies’ prospects, according to the fourth-quarter AICPA Economic Outlook Survey, which polls chief executive officers, chief financial officers, controllers and other certified public accountants in U.S. companies who hold executive and senior management accounting roles.

Some 57 percent of survey respondents expressed optimism about the U.S. economy over the next 12 months, down 12 percentage points from last quarter and a steep decline from the post-recession high of 79 percent set at the start of the year. Trade issues and rising interest rates were cited as factors for the decline this quarter, along with concern about the U.S. deficit and underlying issues such as corporate and personal debt levels. The survey was conducted after the recent midterm elections.

Business executives’ outlook for their own companies held relatively firm at 69 percent, a decline of a single percentage point from last quarter. In a similar vein, survey respondents who said they expected their organizations to expand in the next 12 months fell from 70 percent to 67 percent, a rate that remains high from a historical perspective.

Trade Conflicts & Interest Rate Changes

“We see continued concern about potential trade conflicts and the impact of interest rate changes,” said Arleen R. Thomas, CPA, CGMA, managing director of Americas and CGMA Global Offerings for the Association of International Certified Professional Accountants. “Still, even though business executives are taking a more tempered view of revenue and profit growth in the coming year and expect to rein in spending in some areas, they maintain fairly broad optimism about business expansion and their own companies’ prospects.”

Availability of skilled personnel remains the top challenge for businesses, a position it has occupied since the third quarter of 2017. Almost half of survey respondents (48 percent) said they planned salary, wage or commission increases in the next 12 months to help retention and recruitment amid the tight labor market. A majority (62 percent) of those who said they planned increases said they expected these to fall in the three to five percent range.

Business Response to Tight Labor Market

Salary/wage/commission increases48%
Improved benefits18%
One-time bonus13%
Additional time off11%


Hiring plans continue to be strong, although many companies say they face a scarcity of candidates with the right skills and experience. Overall, half of business executives said their companies currently have the right number of employees. Of the 42 percent who have too few employees, some 14 percent said they were reluctant to hire, while 28 percent said they planned to hire immediately.

The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. In comparison, the U.S. Department of Labor’s November employment report, scheduled for release tomorrow, looks back on the previous month’s hiring trends.

The CPA Outlook Index—a comprehensive gauge of executive sentiment within the AICPA survey— fell three points to 76, its lowest level since the second quarter of 2017 but still strongly positive. The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and greater numbers signifying positive sentiment. All nine components of the index fell this quarter, with the biggest shift an eight-point drop in U.S. economic optimism.

Inflation worries remained consistent with last quarter, with almost half (49 percent) of respondents expressing concern. Labor costs are seen as the biggest potential contributor to that concern...

Other key findings of the survey:

  • Expectations for profit and revenue growth over the next 12 months were pared back significantly from last quarter. Profit growth estimates fell from 4.3 percent last quarter to 3.4 percent, the lowest rate since the second quarter of 2017, while revenue growth expectations dropped from five percent to 4.3 percent.
  • Despite sentiment from many respondents about the need for pay increases to combat the tight labor market, overall expectations for increases in salary and benefit costs over the next 12 months tailed off slightly in the quarter from 2.8 percent to 2.6 percent. That interrupts a steady rise tracking back to the first quarter of 2016.
  • Inflation worries remained consistent with last quarter, with almost half (49 percent) of respondents expressing concern. Labor costs are seen as the biggest potential contributor to that concern.
  • Anticipated spending for many business components, including IT, training and development and R&D, ebbed slightly in the quarter.
  • After availability of skilled personnel, the No. 2 and No. 3 challenges for businesses were “employee and benefit costs” and “domestic competition,” respectively.

The fourth-quarter AICPA Business and Industry Economic Outlook Survey was conducted from Nov. 7-28 and included 938 qualified responses from CPAs who hold leadership positions, such as chief financial officer or controller, in their companies. The overall margin of error is less than 3 percentage points. A copy of the report can be found on




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About the Association of International Certified Professional Accountants
The Association of International Certified Professional Accountants (the Association) is the most influential body of professional accountants, combining the strengths of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA) to power opportunity, trust and prosperity for people, businesses and economies worldwide. It represents 667,000 members and students across 184 counties and territories in public and management accounting and advocates for the public interest and business sustainability on current and emerging issues. With broad reach, rigor and resources, the Association advances the reputation, employability and quality of CPAs, CGMAs and accounting and finance professionals globally.