Three years ago, at the onset of the COVID-19 pandemic, CPA decision-makers in business and industry were historically pessimistic about their own organizations. A year later, they were mostly optimistic, with 76% in the second quarter of 2021 expressing optimism about the year ahead.

Today, that positive sentiment essentially has been wiped out by inflation and other factors, according to a new quarterly survey that shows just 35% of respondents are optimistic about their companies.

The Business and Industry Economic Outlook Survey released Thursday by AICPA & CIMA, together as the Association of International Certified Professional Accountants, shows declines in revenue and profit projections for the coming year along with declining optimism about the domestic economy and continued low expectations for the global economy.

The quarterly survey polled CPA decision-makers — primarily CFOs, CEOs, and controllers — about the global and U.S. economies, top challenges, and hiring plans. The data comes from the responses of 433 finance leaders between May 2 and May 24.

After rebounding from a historic low of 12% in the fourth quarter of 2022 to 23% last quarter, U.S. economic optimism now stands at 14%. Fifty-six percent of respondents are pessimistic about the U.S. economy — a 12-point increase since last quarter. After showing more optimism at the start of the year, respondents are less enthusiastic about their organizations — returning to the 35% optimism mark of the fourth quarter of 2022.

The outlook on the global economy remained consistent from last quarter. Eleven percent are optimistic and 49% are pessimistic — a 1-point increase for each — with the rest neutral.

Revenue and profit projections also lost their first-quarter gains. Revenue projections for the coming 12 months dropped from a rise of 2.6% in the first quarter to 1.3% this quarter — even less than the 2.1% projected in the fourth quarter of 2022. Profitability projections are back in negative territory, at −0.9% after a projected 0.6% rise in the first quarter.

Expansion plans have cooled, and contraction for some organizations could be on the horizon. While 52% of respondents anticipated business expansion at the beginning of the year, now only 43% are planning to expand. Contraction could be more likely — 20% of respondents in the first quarter predicted their business would contract, and 31% predict a contraction now.

One-year spending projections did not change much since last quarter. Projections for IT spending remained the same at 3.1%, and both training (1.5%) and other capital spending (2.4%) declined one-tenth of a percentage point.

Views on hiring have shifted slightly since last quarter, too. Forty-six percent of respondents believe they have the right number of employees, up 1 point from the first quarter. Hesitancy to hire saw a 6-point jump to 17%, and 26% have plans to boost their workforce, a decrease from 33% in the first quarter.

Inflation has been the biggest challenge for CPA decision-makers for more than a year, and 78% of respondents cite it as their top concern, a 4-point decrease since last quarter. Rounding out the top five challenges are domestic economic conditions, employee and benefits costs, the availability of skilled personnel, and the costs of materials, supplies, and equipment.

Editor’s note: Listen to or read a transcript of a JofA podcast episode with further insight into the survey. The episode will be on the podcast homepage later on Thursday.