Optimists and pessimists about the U.S. economy’s next 12 months both cite election results as reasons for their feelings, but in the latest quarterly survey of CPA decision-makers, optimism reigns now that Donald Trump has been elected president.
The fourth-quarter Business & Industry Economic Outlook, released Thursday by the AICPA, shows a gain across each indicator in the CPA Outlook Index (CPAOI).
Optimists about the U.S. economy outnumber pessimists nearly 6 to 1 in the fourth quarter, helping the overall CPAOI hit a mark of 74 (see chart below). Only twice has the index, a nine-component gauge of economic sentiment, been higher in the eight years it has been measured.
One unnamed respondent who was very optimistic about the future of the U.S. economy gave this reason: “Too much federal regulation. The election of Donald Trump will change this fact and will translate into real economic growth.”
Another: “Republican-controlled Washington, D.C., to lower tax rates and reduce regulation.”
Regulation is a longtime pain point for CPAs in the survey, regularly sitting atop the list of challenges for organizations. The only time recently that regulatory requirements were not No. 1 on the list was when the domestic economy took the top spot, in the first quarter of 2016. Overall sentiment took a big dip then, but it has risen each of the past three quarters in the survey.
U.S. economic optimism has been the main driver of the CPAOI’s fall and rise recently. Sentiment about the domestic economy dropped 17 points from the fourth quarter of 2015 to this year’s first quarter, and it rose 18 points between the third and fourth quarter.
Election results aren’t the sole impetus for a positive or negative outlook among finance executives. New business in the form of commercial customers is one reason John Fruhwirth, CPA, CGMA, is optimistic about Archon Woodworks Inc. The company, based in Nebraska, sells to manufacturers and remodelers the wood components for kitchen cabinets.
He said consumer sentiment is positive, which can lead to more people buying…