51% of business executives say the U.S. is already in recession

According to the fourth quarter AICPA and CIMA Economic Outlook Survey, some 51% of business executives said the US economy is either already in recession or will be in recession in the new year. The survey surveyed chief executive officers, chief financial officers, controllers, and other certified public accountants of U.S. companies holding executive and senior management accounting positions.

Just 12% of business executives are optimistic about the U.S. economy over the next 12 months, the lowest level since the throes of the Great Recession in early 2009. This compares with 18% in the previous quarter and 41% a year ago. Inflation, rising interest rates and high energy costs were cited as the main reasons for the downbeat outlook.

A big challenge for finance teams in recent quarters has been uncertainty. A quarter of respondents said their organization has increased forecasting rounds compared to what it has done during the pandemic economy. About a third said they were continuing to improve their forecasts at the time.

Beyond forecasting frequency, more than a quarter of business executives said forecasting had become more complex over the past year, with another 37 percent saying it had become somewhat more complex. Key factors are uncertainty surrounding pricing issues, supply chain reliability, labor costs and changing consumer demand.

Tom Hood, executive vice president of AICPA and CIMA, CPA, CITP, CGMA, said: “During the pandemic, we have seen record frequency of forecasting and forecasting, and a combination of inflation, supply chain integrity and recession risk. With certainty, this trend is clearly continuing, according to the President of Business Engagement and Growth. “We expect this pace to remain strong as the company grapples with cash flow in the coming quarters. “

According to Hood, the main pressure points for CFOs dealing with heavier workloads are finance team staffing and the digital transformation of finance workflows.

The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. By contrast, the Labor Department’s November jobs report, due tomorrow, looks back at last month’s hiring trends.

Other key findings from the survey:

  • When it comes to hiring, 34% of business executives say their organizations are looking to fill job openings immediately, the same as last quarter, while another 17% say they have too few employees but are hesitant to hire Indecision. Eight percent said they had too many employees, up from 5 percent in the previous quarter.
  • Profit expectations for the next 12 months fell into negative territory (-0.2%) from zero expected growth in the previous quarter. Revenue growth forecasts also fell to 2.1 percent from 2.6 percent in the previous quarter.
  • The level of optimism among business executives about their organization’s prospects for the next 12 months fell another 6 percentage points, from 41% to just 35%
  • Forty-five percent of business executives said their companies had increased their cash positions over the past 12 months, with 14 percent saying they had significantly raised cash on hand.
  • The outlook for the global economy over the next 12 months among U.S. business executives also fell, to 7 percent from 9 percent in the previous quarter.
  • Inflation was the top concern of business executives for the fifth straight quarter. Other key challenges include “employee and benefit costs” and “availability of skilled personnel.”
  • The proportion of business executives who said their companies planned to expand fell 3 percentage points from 49% to 47%.

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