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December 03, 2021 at 04:09 PM
What You Need to Know
- Inflation, hiring difficulties and the pandemic all factor into the diminished economic outlook.
- Profit expectations are also under pressure.
- The tight labor market is a factor in an anticipated increase in salary and benefit costs.
Inflation fears and a tough hiring environment continue to drag down optimism in the U.S. economy, the American Institute of CPAs reported this week.
Only 41% of business executives in a recent survey expressed optimism in the U.S. economy over the next 12 months, down from 51% in the third quarter and 70% in the second quarter.
The executives also took a dimmer view of their own organizations’ prospects, with 58% expressing optimism, down seven percentage points from the third quarter.
The AICPA conducted its latest business and industry economic outlook survey from Oct. 26 to Nov. 17 among 628 CPAs who hold leadership positions, such as chief financial officer or controller, in their companies.
The 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 November employment report, released Friday, looks back on the previous month’s hiring trends.
Top Concern
Inflation is now the top concern cited by survey respondents, topping worries about the limited availability of skilled personnel.
The tight labor market is a factor in an anticipated increase in salary and benefit costs, which are expected to rise by 4.3% over the next 12 months, the fastest rate since before the 2008 recession and a boost from the 3.7% projected rate last quarter.
Profit expectations are also under pressure; the anticipated growth rate for the next 12 months dropped to 2.1% from 2.5% last quarter. Revenue growth projections, on the other hand, rose to 4.7% from 4.3% quarter over quarter.
On hiring, 39% of business executives said their organizations are looking to hire immediately, while another 15% said they had too few employees but are hesitant to hire.
Forty-four percent of respondents said they saw no improvement in their pool of potential job candidates after the end of extended federal unemployment benefits in September. About a third said they saw at least a slight improvement.
