AICPA/UNC Kenan-Flagler Business & Industry Economic Outlook Survey packed with information

If you haven’t read the AICPA/UNC Kenan-Flagler Business & Industry Economic Outlook Survey survey yet, it’s worth a look. The survey is loaded with great information. It’s not all bad news, either.

Conducting in the first two months of 2009, the survey included AICPA members in Business & Industry in the C-suite category. Comparative data goes back to January, with nine periods surveyed.

Respondents were asked about their views on the economic outlook, whether they were more or less confident, optimistic or pessimistic on recovery and when recovery would start to take place. It’s safe to say that generally views were more negative than they were in the last survey of November 2008 and prior. Since there has been some slight improvement in the market and economy since March, I am anxious to see what the 2^nd Quarter survey will look like.

Interestingly, there was a sharp increase in positive responses to the question, “Do you think Congress should pass an economic stimulus package to boost the economy?” In July, around 15% supported passage of another stimulus package; that number had increased to a little more than 30% in November. By January 2009, the percentage saying they supported passage of a new stimulus passage had climbed to more than 60%. That is quite an increase in just five short months.

I felt there were some signs, maybe not of good news, but less bad news in the report. The participants were asked which measures they are planning in response to the current economic conditions. Of the seven items presented, layoffs was fifth! Now it’s a tight race in the top 5 with compensation freezes at number one at over 45% followed by capital spending cuts at around 45% of respondents, then hiring freezes, travel restrictions and layoffs between around 44% to a little over 40% respectively. OK, so they are extremely close, but it’s encouraging to me that layoffs aren’t number one since that can be the easy way out for some.

The most encouraging, to me, was how the respondents answered questions about the credit market crisis impact on their company. There was only a slight change downward in the companies not seeing any change in the impact on their company from the credit market crisis with the majority of that change going to problems with customer collections. There were slightly fewer participants who were experiencing higher credit costs and more restrictive terms and a negligible increase in those who were finding less financing options for their business. There is a great article/checklist in the May Journal of Accountancy on Loan Covenants that you should check out.

So, what are you seeing? Do you think there are signs of small improvement? Post a comment.

– Mark Koziel

Comments

Mark, thanks for highlighting the survey. After the results of the 1st quarter survey were released, the JofA held a round-table discussion with several CPA financial executives. The executives, interviewed in March, shared experiences correlating with survey results that indicated 23% of executives had experienced higher credit costs and tighter restrictions.

The article, in our May 2009 issue, is now available online at http://www.journalofaccountancy.com/Issues/2009/May/20091376.htm

-Megan Pinkston
Online Editor, journalofaccountancy.com