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Pessimists Dominate in First Economic Survey from Kenan-Flagler, Accounting Group

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CHAPEL HILL, N.C.  — tHE Kenan-Flagler Business School at UNC is teaming up with the American Institute of Certified Public Accountants for the first time to deliver an assessment of the U.S. economy. Unfortunately, that first report isn’t a good one if you favor growth and are not selling short for a recession.

The AICPA, which recently established a major presence in Durham, and Kenan-Flagler say in their first joint survey that pessimists about the economy  outnumber the optimists among executives surveyed by about a 5-to-1 margin.

The accounting organization launched its survey two years ago, and this is the first one that is dominated by a glum view.

“The good news is that executives anticipate increases in revenues, net income and employment for their firms in the next 12 months,” said Mark Lang, an accounting professor at Kenan-Flagler.

However, some 59 percent of the execs surveyed saying they are “pessimistic or very pessimistic” about the economy.

That’s a huge change from the fourth-quarter survey, when 30 percent of execs surveyed were optimistic and 26 percent were not.

In good news for the technology-heavy Triangle, technology executives were the most positive. The most glum? Finance and insurance, retail trade and manufacturing.

“The bad news is that they expect a downturn for the economy as a whole,” Lang said. “In the end, the implications for the U.S. economy depend on which assessment is more accurate.”

The AICPA sees good and bad, too.

“This is a strong signal from CPA financial executives serving in business and industry that they think the U.S. economy is slowing down,” Arleen Thomas, senior vice president of the AICPA, said in a statement.

However, as Lang noted, Thomas mined the data and found some encouraging views.

“At the same time, CPAs express more confidence in their own businesses, suggesting the downturn may not be as deep as some may fear,” she said.

The survey brings to mind the old saying: A recession is when your neighbor loses his/her job. A depression is when you lose yours.

In the survey, 46 percent of surveys were optimistic or very optimistic about their own companies. In fact, most executives predicted revenue and profit growth as well as an increase in jobs.

The survey drew responses from more than 1,500 certified public accountants who are C-level executives.

Some other key points:

• Most believe the stimulus packaged passed by Congress was necessary to head of a recession
• Top election-year concerns: economic growth, prices for energy and the value of the dollar.

The Skinny

WRAL Local Tech Wire Publisher and Editor Rick Smith dishes out tidbits from the local technology sector. Read more articles…