Business outlook brightens somewhat despite trade, inflation concerns

Business leaders are shaking off some of their gloom about the economy, but they continue to show trepidation about inflation and tariffs, according to a third-quarter survey.

The AICPA and CIMA Economic Outlook Survey, which gauges the sentiment of CPA decision-makers in the United States, continued a theme of uncertainty in results released Thursday. More than half (54%) of the 275 respondents expect a recession this year or next, and about a third (34%) expressed optimism about the domestic economy for the coming year. That optimism is up from 27% the previous quarter but well below the post-election sentiment in December 2024, when 67% were optimistic.

Inflation returned to its spot as the top concern of business and industry respondents, whose 12-month outlooks on revenue and profit rose slightly. Hiring and own-company optimism remained stable, and sentiment about the global economy increased from 19% to 23% optimistic.

The survey was conducted from Aug. 5 to Aug. 26.

Thirty-seven percent of executives are optimistic about their own company’s prospects, the same as the previous quarter, and 46% expressed optimism about business expansion — up 3 percentage points from the previous quarter.

Respondents expressing optimism cite the Trump administration’s pro-business stance; pessimists cite concern about the impact of tariffs.

Small gains in KPIs

Business leaders are cautiously regaining confidence, reporting modest improvements in KPIs.

Revenue projections are now at 1.5%, a half-point rebound from last quarter. Profitability rose out of negative territory (-0.3%) with executives forecasting a 0.1% increase for the coming 12 months.

Estimated IT spending increased from a 2.5% pace to 2.8%, and investments in other capital also increased to a rate of 2.1% from last quarter’s 1.4%. More executives are hoping to invest in training and development — 1.2%, up five-tenths from the second quarter.

Hiring intentions fluctuated slightly since last quarter. Sixteen percent of executives have too few employees and have ambitions to hire — up two points from last quarter. Hesitancy to hire dropped one point to 17%, as did the percentage of leaders who believe they have the right number of employees (51% from 52%).

Strategies for tariff uncertainty

Tariff ramifications are still top of mind for CPA executives, but overall uncertainty has waned somewhat. A majority of business executives (58%) said their companies were experiencing moderate to significant uncertainty in business planning because of changing tariff schedules, down from 67% last quarter.

Their main responses so far to tariffs are increasing prices (30%), reducing operating costs (24%), and exploring different supply chain options (23%).

“Survey participants noted some positives, such as pro-business provisions in the recently enacted H.R. 1 and more favorable regulatory policies under the current administration,” said Tom Hood, CPA/CITP, CGMA, executive vice president–Business Engagement & Growth for the Association of International Certified Professional Accountants. “But volatility in trade policy remains a major overhang, and we haven’t seen the full bite of tariffs yet, so the next quarter could be pivotal to perceptions about the economy’s health.”

— Jamie J. Roessner is a senior content writer at AICPA and CIMA. To comment on this article or to suggest an idea for another article, contact Neil Amato at Neil.Amato@aicpa-cima.com.