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Portfolio > Economy & Markets > Economic Trends

Inflation, Supply Chain Problems Dim U.S. Economic Outlook: AICPA 

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What You Need to Know

  • Executives’ outlook for the global economy fell from last quarter, with just 30% expressing optimism.
  • Russia’s invasion of Ukraine and the ensuing economic and political turmoil are expected to add economic stress.
  • Availability of skilled personnel remains the second biggest challenge for U.S. companies.

Only 36% of business executives in a new survey expressed optimism in the U.S. economy over the next 12 months, down from 41% in the fourth quarter, the American Institute of CPAs reported this week.

The survey also found executives’ outlook for the global economy down 3 percentage points from last quarter to 30% expressing optimism.

AICPA conducted the survey from Feb. 2 to Feb. 23, the day before Russia’s invasion of Ukraine and the resulting imposition of economic sanctions. The sample comprised 461 CPAs who hold leadership positions, such as chief financial officer or controller, in their companies.

Inflation was survey respondents’ top concern for the second straight quarter, with 42% saying labor costs represented the most significant risk in this area and 31% citing raw material costs. Anticipated salary and benefit costs for the next 12 months ticked up slightly to 4.4%; a year ago, the projected rate was 1.9%. 

“Our survey shows significant concerns about inflation and lingering supply chain issues from the pandemic,” Ash Noah, managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants, said in a statement. 

“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.” 

Availability of skilled personnel remains the second biggest challenge for U.S. companies beyond inflationary pressures. On hiring, 45% of business executives said their organizations are looking to fill roles immediately, while 12% said they had too few employees but are hesitant to hire. 

The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. In comparison, the  Department of Labor’s February employment report, released Friday, looks back on the previous month’s hiring trends. 

Sentiment Gauge Slips

The CPA Outlook Index, a comprehensive gauge of executive sentiment within the AICPA survey, fell 1 point from the fourth quarter to 73. The index is a composite of nine equally weighted survey measures set on a scale of zero to 100, with 50 considered neutral and higher numbers signifying positive sentiment. 

The first-quarter survey found that 58% of business executives have a positive outlook for their own company’s prospects, the same as last quarter, despite their deteriorating view of the economy.

Profit expectations declined to an anticipated growth rate of 1.6% over the next 12 months, down from 2.1% in the fourth quarter, the lowest level since the end of 2020. Profit expectations had been as high as 4% in the second quarter of 2021.

Revenue projections fell as well. 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 participants said they expect their companies to expand over the next 12 months, down 2 points from the October-to-December period.


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