"This is the first time since we launched the Economic Outlook survey three years ago that so many CPAs in business and industry have expressed this level of anxiety about the state of the U.S. economy," said John Morrow, AICPA vice president for business, industry and government. More than half of CPAs surveyed cited subprime mortgage losses, a slowdown in U.S. housing and tightening credit conditions for their shift in sentiment. Other concerns were rising prices of oil and gas as well as the declining value of the U.S. dollar.
The survey was conducted Oct. 10-28 via a questionnaire emailed to AICPA Business, Industry and Government members. With 1,171 qualified responses, the margin of error was plus-or-minus 3 percentage points. Sixty-nine percent of the respondents in October said the Federal Reserve's cut of 50 basis points in its federal funds target rate to 4.75 percent on Sept. 18 was necessary to prevent market turmoil from stalling the economy. One-quarter felt it was unnecessary and may reinforce poor risk decisions.
Despite the gloomy view of the U.S. economy, 60 percent of CPA executives expect to see growth in revenues and profits within their own organizations. That was a decline of five percentage points from 65 percent who expected growth in July. Job creation may not be as robust. Less than half, 48 percent, said they expect to add employees over the next 12 months, while 18 percent foresee layoffs.
Healthcare costs remain a significant challenge, according to 96 percent of respondents. Forty percent said their organizations anticipate that health care costs will continue to grow at a pace greater than 8 percent over the next year. When the AICPA first conducted this survey in June 2004, 75 percent of respondents said they were optimistic or very optimistic about the U.S. economy. One year later, optimism dropped to 57 percent. In June 2006, optimism showed further erosion to 46 percent.
