Escalating fuel prices and the weakened housing market are coloring the opinion that C-suite CPAs have of the U.S. economy, according to the Spring 2007 Business and Industry Economic Outlook Survey conducted by the American Institute of Certified Public Accountants (AICPA). Many of these executives also believe that energy availability and the significant number of sub-prime mortgage foreclosures could affect their own businesses.

Less than half of these executives have a favorable view of the economy. Two-thirds expressed concern about fuel prices and energy availability. Other factors contributing to their loss of optimism include the war in Iraq, the change in Congress, debt, inflation, interest rates and declining domestic investment. Nonetheless, they remain positive about the outlook for their own organization. Two-thirds of the respondents expect their businesses to expand over the next 12 months. Although ninety-five percent noted employee and benefit costs as a challenge, most organizations continue to expect increases in revenues, profits and the number of employees.

Most executives are expecting increases in revenues as opposed to profits. Employee costs coupled with a limited ability to raise prices have reduced the expectations of profit increases. Spending plans remain stable. "What's particularly interesting is that despite reservations about the U.S. economy, companies continue to have a healthy outlook on their own businesses within the next twelve months, and anticipate continued stability in terms of revenue and hiring expectations," said John Morrow, AICPA Vice President for Members in Business, Industry and Government. "It is worth noting that in spite of the organizations' concerns about energy prices and the housing market, they do not yet see them as having a major impact on the financial results of their organizations'."

Staff-related issues, including retention and availability of professionals with management and specialized skills, account for four of the top five challenges faced by organizations. And, regulatory challenges rounded the top five, with materials, supplies and equipment costs close
behind.