Business Leaders Grow More Pessimistic on US Economy — Evening Brief – 09.10.24
Business leaders have cited inflation as their primary concern throughout much of the year. However, the downtrend in inflation readings hasn’t improved their position as 26% expressed confidence about the U.S. economic outlook over the next 12 months, down from 35% in the second quarter and 29% a year ago, according to the AICPA & CIMA Economic Outlook Survey. Those who are optimistic about the global economy also decreased, from 22% to 19%, quarter over quarter.
“There’s less worry about inflationary pressures and we have the likelihood of interest rate cuts by the Federal Reserve,” said Tom Hood, AICPA & CIMA’s EVP for business engagement and growth.
With almost 20% stating it would be quite favorable, 69% of business leaders indicated an expected interest rate cut would have at least a moderately positive impact on their company. The drawback would be possible influence on investment portfolios.
“But geopolitical concerns continue to weigh on global commerce, we’ve seen downward revisions to strong U.S. job growth figures and many business leaders are concerned about rising labor costs, which is making the hiring outlook worse than it had been earlier this year,” Hood added.
Approximately 57% of company leaders stated they were concerned about inflation over the next six months, a substantial decrease from 75% last quarter. Inflation, which had been the top issue in the survey for the previous three quarters, dropped to second place this quarter, trailing only employee and benefits costs.
The survey highlighted other key findings. Revenue and profit expectations for the next 12 months both fell to 1.9%, down from a 2.9% projection last quarter, and 0.2%, down from 1.5% in the second quarter, respectively.
Leaders who indicated they were positive about their own organization’s prospects for the next year declined to 41% from 48%, quarter over quarter. Only 44% of respondents expect their firms to grow in the next 12 months, a decrease from 53% last quarter. The percentage of leaders expecting a contraction increased to 27% from 20%.
Furthermore, 54% of respondents said election uncertainty had little or no effect on their company predictions, 12% said it had a big impact, and 34% said it had a moderate impact.
The third-quarter survey was performed from August 6 to 27, 2024 and received 310 responses from CPAs and Chartered Global Management Accountants (CGMAs) in leadership positions.