Confidence in U.S. economy rises despite inflation concerns

For the first time in a year, inflation hopped back into the top spot of challenges faced by CPA decision-makers responding to the quarterly AICPA and CIMA Economic Outlook Survey.

Even so, the 206 CEOs, CFOs, and controllers surveyed in August reported increased optimism in the U.S. and global economies and an increase in revenue and profit projections.

Inflation, materials/supplies/equipment costs, and domestic economic conditions occupied the top three spots in the list of top 10 challenges, each one moving up one spot in the third quarter.

The percentage of executives who are optimistic about the U.S. economy over the next 12 months rose in the third quarter from 32% to 36%, and optimism in the global economy improved from 19% to 24%.

“The third-quarter results reflect a business community that remains resilient despite ongoing economic headwinds,” Tom Hood, CPA/CITP, CGMA, executive vice president–Business Growth and Engagement at the Association of International Certified Professional Accountants, said in a news release. “Confidence improved this quarter, but organizations continue to take a disciplined approach to investment and growth as they monitor inflation, costs, and broader market conditions.”

The respondents’ forecast for profit growth over the next 12 months increased from 1.1% to 1.5% quarter-over-quarter, and revenue projections bumped up from 2.6% to 3.1%, the highest figure since the fourth quarter of 2024. However, the percentage of executives forecasting that their own businesses will expand in the next year dropped from 54% to 49%, as optimism in their own companies slipped from 49% to 48%.

Other findings in the survey:

• Employee and benefit costs tumbled down the top 10 list of challenges from the top spot last quarter to fourth as sentiment on hiring improved. CPA leaders needing employees increased from 28% to 33%. Those with plans to hire jumped from 16% to 20%, while those hesitant to hire remained low at 13%.

• Energy costs fell from seventh to 10th on the list of challenges. The percentage of CPA decision-makers naming energy costs as the potential inflationary factor presenting the most significant business risk slid from 27% to 23%. Labor costs were the top inflationary risk but fell from 29% to 26%, while interest rate concerns increased from 16% to 19%.

• Projected growth in spending over the next 12 months slowed by a half-percentage point in each of three areas covered by the survey, with executives forecasting a 2.9% increase in IT spending, 2.4% in other capital expenditures, and 1.3% in training and development.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.