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Business Executives Sharply Cut Profit and Sales Outlook Due to Pandemic Impact, AICPA Survey FindsBattered by repercussions from the COVID-19 pandemic, business executives hold the most pessimistic view of the U.S. economy since the end of 2011, when the nation was still emerging from the lingering impact of the Great Recession, according to the second-quarter AICPA Economic Outlook Survey. The survey polls chief executive officers, chief financial officers, controllers and other certified public accountants in U.S. companies who hold executive and senior management accounting roles. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200604005214/en/ Profit and Revenue Expectations for next 12 months (Graphic: Business Wire) Only 20 percent of survey takers expressed optimism about the U.S. economy's overall outlook over the next 12 months, down from 61 percent last quarter, when concerns about the coronavirus outbreak first began to quicken. The optimism metric hadn't fallen that low since the fourth quarter of 2011, when it stood at 19 percent. U.S. executives also took a dim view of the global economy this quarter, with only 11 percent expressing optimism. Companies have cut their profit and sales outlooks significantly in response to stay-at-home restrictions and other pandemic-related impacts. Business executives now expect revenue to shrink five percent over the next 12 months, a swing from an anticipated 4.3 percent growth rate last quarter. Profit expectations, meanwhile, have been adjusted to reflect a drop of 5.5 percent, down from an anticipated 3.3 percent growth rate. As of the first-quarter survey, less than eight percent of business executives said their companies had made downward adjustments to their forecasts due to the pandemic. For this quarter, 81 percent said their organizations had done so. "Not surprisingly, this quarter's survey documents the severe impact the pandemic has hd on the outlook for U.S. businesses," said Ash Noah, CPA, CGMA, managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants. "Moving forward, the reopening or ramping up phases in different states will be critical but the rise of liquidity concerns and the uncertain social and economic environment, including potential second-wave infections and prospects of additional layoffs, continue to present an extremely challenging environment for businesses." The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. In comparison, the U.S. Department of Labor's May employment report, scheduled for release tomorrow, looks back on the previous month's hiring trends. The CPA Outlook Index-a comprehensive gauge of executive sentiment within the AICPA survey- fell 50 percent since last quarter and now stands at 38, its lowest level since early 2009. The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and lower numbers signifying negative sentiment. Other key findings of the survey:
Methodology The second-quarter AICPA Business and Industry Economic Outlook Survey was conducted from May 5-27 and included 1,198 qualified responses from CPAs who hold leadership positions, such as chief financial officer or controller, in their companies. The overall margin of error is less than 3 percentage points. A copy of the report can be found on aicpa.org. About the American Institute of CPAs The American Institute of CPAs (AICPA) is the world's largest member association representing the CPA profession, with more than 431,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession. About the Association of International Certified Professional Accountants The Association of International Certified Professional Accountants (the Association) is the most influential body of professional accountants, combining the strengths of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA (News - Alert)) to power trust, opportunity and prosperity for people, businesses and economies worldwide. It represents 650,000 members and students across 179 countries and territories in public and management accounting, and advocates for the public interest and business sustainability on current and emerging issues. With broad reach, rigor and resources, the Association advances the reputation, employability and quality of CPAs, CGMAs and accounting and finance professionals globally. View source version on businesswire.com: https://www.businesswire.com/news/home/20200604005214/en/ |