Business leaders show growing optimism in US economy

Is the U.S. economy destined for continued growth or heading into recession? It’s a question pondered daily by investors and analysts around the world, but what do business leaders think?

Just 16% of executives responding to the third-quarter AICPA & CIMA Economic Outlook Survey said they expect a recession by the end of 2023, a sharp drop from the 46% who thought so in the previous quarter.

The poll shows growing optimism for the economy with 29% having a positive outlook, still weak, but up from just 14% who thought so in the second quarter. There has also been a rise in their outlook for the global economy, up from 11% in Q2 to 17% in Q3.

"Most of the indicators we track are up this quarter, buoyed by greater prospects for a soft landing for the economy and a sense that inflation may have peaked," said Tom Hood, the AICPA & CIMA's executive vice president for business engagement and growth. "There's still substantial wariness about the economic outlook, however. One strong positive is that half of business executives now expect to see expansion in their organizations over the next 12 months."

While inflation remains challenging, the latest survey saw it slip from the #1 spot to be replaced by availability of skilled personnel, a reflection of the tight labor market, with 39% of executives saying their business has too few employees.

Providing good news for investors, 12-month profit expectations swung from negative (-0.9%) to a narrow positive (0.1%) in the quarter while revenue growth for the next 12 months is now projected to be 1.9%, up from 1.3% last quarter.

Investor confidence has also increased in recent polls including the latest from State Street Global Markets.