Optimism about U.S. Economy Hits Three-Year High

Businessman plan graph growth and increase of chart positive indicators in his business
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The second-quarter AICPA Economic Outlook Survey polled chief executive officers, chief financial officers, controllers and other certified public accountants in U.S. companies who hold executive and senior management accounting roles.

70% of business executives expressed optimism about the U.S. economy over the next 12 months, up from 47% in the first quarter, as government relief funds, vaccine rollouts and relaxed workplace restrictions have improved business conditions. It’s the first time a majority of executives have held a positive sentiment on the economy since the pandemic began in the first quarter last year, and it’s the highest level that measure has reached since the second quarter of 2018.

There are concerns, however. “Availability of skilled personnel” reemerged as the top-cited challenge for businesses as job recruitment turns up. And two-thirds of business executives now express concern about inflation, up from 44% last quarter.

Most of the outlook was overwhelmingly positive, however:

• Business executives’ optimism about their own organization’s prospects over the next 12 months rose to 76% from 58% last quarter.

• Some 69% of executives say their companies plan to expand in the next 12 months, up from 58% last quarter.

• Profits are expected to grow by four percent in the next 12 months, more than doubling last quarter’s 2% forecast. And revenues are expected to climb five percent, up from 3%. Both projections are at their highest levels since 2018.

• The hiring picture is also significantly improved with 33% of executives saying their companies planned to fill positions immediately, up from 19% last quarter.

Another 14% said they have too few employees but are hesitant to hire. The percentage of executives who said their companies had too many employees declined from 7 to 4%, quarter over quarter.

“What we’re seeing is a broad expectation that things will really open up in the second half of the year,” said Ash Noah, CPA, CGMA, VP and managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants, representing the AICPA and CIMA. “Many issues remain, of course. Supply chains are still straining to meet demand in a number of sectors. The global response to the pandemic still contains many uncertainties, which impact the United States. But we are clearly seeing growing confidence on the part of business executives that the worst is behind us.”

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 employment reports look back on previous months’ hiring trends.

The CPA Outlook Index-a comprehensive gauge of executive sentiment within the AICPA survey-now stands at 78, up 10 points from the first quarter and its highest level since the third quarter of 2018. The index is a composite of nine equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and higher numbers signifying positive sentiment. Every component of the index rose at least six points in the past quarter.

Other key findings of the survey:

• Some 50% of business executives expressed optimism about the global economy, up from 37% in the first quarter.

• After “availability of skilled personnel,” the top challenges cited by businesses are “materials/supplies/ equipment costs” - number six in Q1 - and “domestic political leadership.”

• Companies’ input prices are predicted to increase by 4.4% over the next 12 months, up from Q1’s forecast of 3%. Conversely, the prices executives expect their companies to charge are expected to increase 2.7% in that timeframe, up from 1.8%.

• Sectors seeing stepped-up hiring compared to last quarter include the category that includes pharmaceutical companies and medical device makers, manufacturing, and hospitality and entertainment.

Those seeing increases ramp down a bit include banking and real estate.

The second-quarter AICPA Business and Industry Economic Outlook Survey was conducted from April 27 to May 24, 2021, and included 770 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 The Association of International Certified Professional Accountants (the Association), representing AICPA and CIMA, advances the global accounting and finance profession through its work on behalf of 696,000 AICPA and CIMA members, students and engaged professionals in 192 countries and territories. Together, they serve as an informational leader on public and management accounting issues through advocacy, support for the CPA license and specialized credentials, professional education and thought leadership.