News built for finance pros
CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.
The accountants—those ever-responsible number-crunchers who aren’t exactly paid for their fun, upbeat personalities—are not feeling particularly optimistic right now: It seems that many view the economy as hanging by a thread, according to a Q2 survey that polled 949 accountants, including 100 CFOs, released last month.
Ouch: The survey, which has been conducted by the Association of Chartered Certified Accountants and the Institute of Management Accountants for over 10 years on a quarterly basis, found that confidence in the North American economy has declined to levels last seen during the Covid-19 pandemic.
The report indicates that accountants see “a decisive deterioration in the global economic outlook,” Loreal Jiles, vice president of research and thought leadership at the Institute of Management Accountants, told CFO Brew. Jiles said their forecast, formed by a wide range of accountants, is vital, because they get “insider views on the macroeconomic environment, within different geographies, from the perspective of someone who’s dealing with the numbers on a daily basis.”
Why now? The accountants surveyed cited inflation and the global political environment as two trends fueling their bleak outlook, but supply shortages and supply-chain issues remain the highest-ranked risk. Confidence in North America is particularly grim, “while globally, we don’t see a dip below what we’ve seen at the lowest point of the pandemic in North America,” Jiles told CFO Brew.
Looming recession: While some may hope for a quick recovery, Jiles said that accountants aren’t as optimistic. “In this quarter, we got enough insight to be able to see that there’s a very strong view that the global economy will be weak through the second half of 2022,” she said.
Jiles emphasized that “based on the data that we’ve seen, we do anticipate potentially small recessions. I’d say it’s short term. And [in] our next quarter, we’ll be monitoring for that.”
Some upside? As the FED begins to increase rates, inflation levels are expected to fall back in 2023, Jiles told CFO Brew. With inflation lowering, Jiles said that households—and, therefore, the larger economy—could fare better.
“High inflation is translating into a considerable dip in real disposable income…household consumption, prices of food and energy—all of those rising rapidly—those are things that people can feel on a daily basis as a personal individual,” Jiles said. This could cause what she calls “small recessions,” versus a globally catastrophic recession.
And while the mention of “smaller recessions” may comfort some economists, inflation has real implications for the livelihood, or “living crunch,” of individuals and sovereign economies, Jiles told CFO Brew. This, as we’ve previously reported, is a forecast many CFOs are prepping for.—KT