Following a partly sunny summer forecast for the U.S. economy, the outlook among CPA decision-makers again clouded in the latest quarterly survey released Thursday by AICPA & CIMA, together as the Association of International Certified Professional Accountants.

Forty-three percent of respondents are pessimistic about the U.S. economy in the latest Business and Industry Economic Outlook Survey, up from 34% the previous quarter. The levels of pessimism didn’t rise back to second-quarter levels (56%).

The survey polled 316 CPA decision-makers — primarily CFOs, CEOs, and controllers — between Nov. 7 and Nov. 28. Sixteen percent of those with too few employees are hesitating to hire, up two percentage points from the previous quarter.

“We’re seeing some softening on the hiring front and IT spending, which are classic areas of belt-tightening in uncertain times,” Tom Hood, CPA/CITP, CGMA, AICPA & CIMA’s executive vice president for business engagement and growth, said in a news release. “At the same time, business executives’ expectations for their own organization’s prospects over the next year are down just a bit from the third quarter and ahead of where they were a year ago. So, there’s a lot of mixed signals right now on the economy.”

Optimism about the U.S. economy slipped, down from 29% the previous quarter to 24%. Still, the new numbers didn’t threaten the historic low of 12% a year ago, the lowest quarter since 2009. Pessimists far outnumbered optimists about the global economy as well.

While the current lack of confidence about the U.S. economy is noteworthy, optimism held relatively steady when decision-makers were asked about their own companies: 43% remained optimistic in the fourth quarter, down slightly from 45% the previous quarter. One year ago, 35% were optimistic about their own companies.

Decision-makers estimated a 0.5% increase in company profits over the next 12 months, up from 0.1% last quarter and negative-0.2% a year ago.

Inflation returns as a top concern

Inflation and domestic economic conditions retook the top two spots on the quarterly list of top 10 challenges facing CPA decision-makers after ranking behind availability of skilled personnel in the third quarter. Prior to last quarter, inflation had topped the list seven consecutive quarters.

Availability of skilled personnel fell to fourth on the list of challenges, just behind employee benefits and costs, matching other survey findings that align with economic pessimism.

Staff turnover fell from fifth to eighth on the list of top challenges, and 12% of respondents said their organizations have an excess of employees, up from 8% last quarter. Among those who report having too few employees (36%), 44% are hesitating to hire. In the third quarter, just 36% of those with too few employees said they were hesitant to hire.

The lower level of concern about dealing with staff turnover and the increased apprehension about hiring points to an economy in which fewer employees are comfortable leaving the security of their current roles.

Other survey findings of note:

  • Another way of spelling out of how economic concern is having a chilling effect on hiring (and spending on hiring): Decision-makers again selected labor costs as their No. 1 inflationary risk factor. However, while a survey-high 39% singled out labor costs, interest rates came in a strong second at 31%. A year ago, labor costs (41%) and interest rates (20%) were separated by 21 percentage points, when concerns about energy and raw materials costs ranked a bit higher than now.
  • Despite the economic concerns, 51% of CPA decision-makers at companies with less than $10 million in annual revenue said they plan to expand over the next 12 months, the first time since the second quarter of 2022 that at least half of respondents in the smallest business category noted expansion plans. On the other hand, among the largest businesses surveyed ($1 billion-plus companies), expansion plans dipped from 57% last quarter to 46% this quarter – the first time that number has been below 50% since the third quarter of 2022.