Looking to 2027: Economic sentiment, hiring plans, inflation concerns

Sponsored by Prudential Group Insurance

Overall, those who are pessimistic about the U.S. economy outnumber those who are optimistic this quarter. But, optimism rose slightly compared with the previous quarter, according to a quarterly survey of CPA decision-makers.

In this episode of the JofA podcast, Ken Witt, CPA, CGMA, associate director–Management Accounting Research & Development for the AICPA and CIMA, breaks down sentiment about the domestic economy, the global economy, and respondents’ companies.

Witt also touches on top challenges and the CPA leaders’ views on hiring, projected revenue growth, and spending plans for the coming 12 months.

What you’ll learn from this episode:

• The increase in optimism related to the domestic and global economies.
• The decrease in own-company optimism from the previous quarter.
• The familiar obstacle for CPA decision-makers that returned to No. 1 on the list of challenges.
• Projected revenue and profit growth in the coming 12 months.
• Projected spending on IT, training, and other capital expenditures.
• A farewell to the survey’s longtime guru.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript

Neil Amato: Hello listeners, welcome back to the Journal of Accountancy podcast. This is Neil Amato with the JofA. It’s the start of September, the start of the final four months of 2026. We’re going to talk about economic outlook for those four months and beyond into 2027 in this episode, which you’ll hear right after this brief sponsor message.

[Sponsor message]

Amato: Welcome back. I’m joined again by Ken Witt, associate director–Management Accounting Research and Development, to discuss the quarterly AICPA and CIMA Economic Outlook Survey. Ken, you’ve been working on this survey by my recall close to 14 years, but actually as I learned from you, it’s more like 22 years.

So we have a lot of institutional knowledge that we’re going to be bringing into this conversation, but also we’re going to discuss the here and now. So first, welcome back. Thanks for being on the podcast.

Ken Witt: Thanks, Neil. Always good to be here.

Amato: Let’s first summarize the Q3 2026 results. What’s the overview to you?

Witt: I think one of the things we’re seeing this quarter is some of the ongoing concerns about core economic issues like inflation and interest rates, but it’s countered by a bit less pressing concern about energy prices and the issues that have been capturing the headlines earlier this year.

Amato: Do you want to go into some of the specific results on optimism? And also a reminder for listeners, we’re publishing this episode on Thursday, Sept. 3. Our news story on journalofaccountancy.com is already published. Ken, what are the results in terms of optimism or pessimism about the global economy, the U.S. economy, and the respondents’ own organizations?

Witt: Optimism about the U.S. economy improved 4 points from 32% to 36%. And optimism about the global economy also improved 5 points from 19 to 24%. That said, optimism about our executives’ own-company prospects eased a point from 49% to 48%. And expansion plans also dropped five points from 54% last quarter to 49% looking ahead from Q3. While hiring plans look a bit brighter, the softness is supported by declines in spending projections.

Amato: Thanks for that. Tell us about the KPI front in terms of 12-month projections for revenue and profit growth.

Witt: Revenue projections are expected to increase from 2.6% last quarter to 3.1% going forward now from Q3. And profits also improved, 1.1% last quarter, and now we’re projecting a 1.5% increase in profits going forward from Q3.

So there’s a little bit of positive news, but I think what we’re seeing is typical for this time of the year. Many companies, at least those with calendar year ends, are looking to keep things on target in terms of their current year budgets. And many are also still in the process of finalizing their 2027 budgets and, with ongoing concerns about the economy, they’re keeping it a bit tight.

So, while there’s some positive revenue and profit forecast, we’re seeing half-point drops in the rate of spending for all three of the categories that we track. IT spending is expected to ease off from 3.4% to 2.9%, other capital spending from 2.9% to 2.4%, and spending for training from 1.8% to 1.3%.

But on the positive side, after seeing much reluctance to hire and some pretty sizable downsizings in some of these larger companies, we’ve got a bit of encouraging news. This quarter, we have a 5-point increase in the percentage of companies who say they need employees from 28% to 33%. Of those needing employees, only 13% say they are reluctant to hire, while 20% now have plans to hire currently. So, both some nice improvements from earlier periods.

Amato: What are the respondents thinking these days about recession concerns and also inflation?

Witt: Yeah, these are some of the numbers we’ve been tracking, both the likelihood of recession and concern about inflation. And in terms of recession, we have some easing in the percentage of respondents who think we are either already in a recession or headed in that direction. down from 51% last quarter to 46% this quarter. But those concerned about inflation remains high at 78% after declining to only 50% in Q1 of this year, rebounded last quarter to 81%. And so now we’re at 78%, so barely a decline.

And inflation also returned to the top spot in our list of major challenges. After slipping to No. 5 in Q1, it’s now leading the pack.

Amato: So, inflation No. 1 on that top challenges list. What are some other highlights of the top challenges this quarter?

Witt: Well, not surprising, inflation was followed by material/supplies/equipment costs, domestic economic conditions, and employee and benefit costs. So sort of two of the big three. Domestic political leadership maintained its position at No. 5. Availability of skilled personnel maintained its position at No. 6. Cybersecurity and regulatory requirements and changes both moved up a spot to No. 7 and No. 8, respectively, and domestic competition returned to the top 10 at No. 9. Energy costs eased three points to the 10th-ranked concern, so, rounding out our top 10.

Amato: That’s great. We’ve hit this quickly. That’s been the tradition of these summary episodes of the quarterly survey. I’m going to take a little time personally to say, Ken, we are going to miss you. You’re retiring later this month. I guess I’m breaking that news to the listeners. What will you miss?

Witt: Oh, I’ll miss the people, especially the people — I’ve worked with a lot of great people at the AICPA and CIMA. I do enjoy doing the survey. I’ve been doing it for a long time, and I like meeting our members at conferences and events that I’ve participated in and presented at over the years.

Amato: I think people share the sentiment that they’ve enjoyed working with you as well. That’s definitely the case for me. And you said this was one of the first things handed to you upon start. So you had a start date that anyone can remember, 4-4-4, that’s April 4, 2004. And you’ve been kind of associated with this survey ever since at the AICPA. So thank you for the work you’ve done on behalf of the members and the wider profession.

Witt: Thanks, Neil. Appreciate it.