The semi-annual AICPA Business and Industry Economic Outlook Survey completed in June showed a decline in optimism with only 57% of CPA decision makers indicating that they continue to be optimistic about the economy as a whole. However, 74% continue to be optimistic about the prospects for their own organizations over the upcoming six month period. Projections for growth, financing, spending and workforce size all point to continued strength for the companies surveyed. However, 22% of companies with revenues in excess of $1 billion indicate plans for workforce reductions.

When asked to weigh in on specific issues, more CPA executives indicated greater concern about the impact of changes in short-term interest rates on inflation than unemployment. On Social Security reform, more are concerned about maintaining current tax rates than current benefit levels. Over 84% indicated that a 10% revaluation of the Chinese Yuan would have a minimal impact on their pre-tax profit. For companies that would be impacted by a revaluation of the Yuan, there was an even split between those that would experience pre-tax profit gains and those that would experience a negative effect on their profitability. Interestingly, while only a small percentage of the companies indicated that they would be affected by a revaluation, a number of write in responses indicated concern about the implications of the flat yield curve. One of the responses to the slight revaluation of the Yuan announced recently was a sharp drop in bond prices as investors anticipate less demand for US bonds. Other concerns receiving a significant number of write-in votes included escalating home prices, corresponding levels of financing and the high level of consumer debt.

This third semi-annual Business and Industry Economic Outlook survey represents the views of 1465 AICPA decision makers including 830 CFOs and 205 CEOs in privately-held and public companies, not-for-profit and other organizations.

This article originally appeared in the August 1, 2005 edition of BusIndNews.

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