RESEARCH TRIANGLE PARK – Emerging issues other than COVID are driving down executives’ attitudes about the US economy, according to a new survey. And those were the key concerns BEFORE Russia invaded Ukraine.

Optimism has plunged about the future of business due to three issues:

  • Supply chain
  • Inflation
  • Lack of skilled job candidates

So reports the Association of International Certified Professional Accountants in its latest quarterly AICPA Economic Outlook Survey.

“Only 36% of business executives expressed optimism in the U.S. economy over the next 12 months, down from 41% last quarter,” the survey says. “The outlook for the global economy also fell, with 30% of business executives expressing optimism, down three percentage points over the same term. Notably, the survey closed on Feb. 23, the day before Russia’s invasion of Ukraine and the resulting imposition of economic sanctions.”

In the South, execs’ optimism fell 7 points.

Revenues are expected to growth, but at a smaller rate from projected earlier. Says the survey:

“Revenues are now projected to increase at a rate of 4.5%, down slightly from the 4.7% rate seen last quarter. Profit expectations are now projected to increase at a rate of only 1.6%, down from 2.1% last quarter, and from the rebound to 4.0% seen in the second quarter of 2021.”

AICPA graphic

Inflation is the top concern for executives – in two areas:

  • Rising labor costs at 42%
  • Increasing raw materials costs at 31%

Second highest concern is finding workers.

Compensation is expected to surge 4.4% this year – more than double the 1.9% what expectations were a year ago, the report adds.

“Our survey shows significant concerns about inflation and lingering supply chain issues from the pandemic,” said Ash Noah of AICPA. “With Russia’s invasion of Ukraine and the resulting economic and political turmoil, we expect additional stresses throughout the global economy. We don’t know yet the full impact on energy and commodity prices and general trade, but the levels of risk and uncertainty have increased for finance managers.”

Other findings in the survey include:

  • “Despite a deteriorating view of the economy, 58 percent of business executives hold a positive outlook for their own organization’s prospects, the same as last quarter.
  • “Profit expectations fell to an anticipated growth rate of 1.6% over the next 12 months, down from 2.1% last quarter, their lowest level since the end of 2020. They had been as high as 4% in the second quarter last year.
  • “Revenue projections also fell. Business executives now expect a 12-month growth rate of 4.5%, down from an anticipated 4.7% last quarter.
  • “Sixty-two percent of survey takers said they expect their organizations to expand over the next 12 months, down two percentage points from last quarter.”