AICPA Business and Industry Economic Outlook Survey Detailed Survey - - PowerPoint PPT Presentation

AICPA Business and Industry Economic Outlook Survey

Detailed Survey Results: 1Q 2020

Management Accounting & Finance

Survey Background

• Conducted between February 4 - 26, 2020
• Quarterly survey
• CPA decision makers

– primarily CFO’s, CEOs and Controllers

• AICPA members in Business & Industry
• 867 qualified responses

1Q 2020 Economic Outlook Survey

Note: Market decline due to Coronavirus concerns began near the end of the time that this survey was in the field. Additional charts breaking down the responses accordingly have been added.

Survey Highlights

3 1Q 2020 Economic Outlook Survey

Overall Index recovers to Q1 2019 level of 76

• US Economy component recovers from 64 to 74
• All components up including US Economic and Organization Optimism
• Expansion plans, revenue and profit expectations all show gains

CPAOI

Early February optimism about Global and US Economy show gains; late month responses reflect significant declines in wake of spread of coronavirus and related impact on markets

• Early response show 11% increase in optimism about US Economy
• Similar improvements seen in optimism about own organization and expansion plans
• End-of-month responses show declines in global, US and organization optimism

Economy and Organization

Expansion plans rebound to 64% overall; small company plans jump from 52% to 62% Employment plans also improve for most sectors, especially for smaller companies Global economic conditions and materials, supplies and equipment costs returned to the top ten challenges at 9 and 10, respectively.

Expansion Employment Challenges

CPA Outlook Index (CPAOI)

4 1Q 2020 Economic Outlook Survey

The CPA Outlook Index is the composite of the following nine indicators at equal weights:

• U.S. Economy Optimism - Respondent optimism about the U.S. economy
• Organization Optimism - Respondent optimism about prospects for their own
• rganization
• Expansion Plans - Respondent expectations of whether their business will expand
• ver the next 12 months
• Revenue - Expectations for increases or decreases in revenue over the next 12

months

• Profits - Expectations for increases or decreases in profits over the next 12 months
• Employment - Expectations for increases or decreases in headcount over the next

12 months

• IT Spending - Plans for IT spending over the next 12 months
• Other Capital Spending - Plans for capital spending over the next 12 months
• Training & Development - Plans for spending on employee training and development
• ver the next 12 months

The CPA Outlook Index is a robust measure of sentiment about the U.S. economy that is supported by the unique insight and knowledge that CEOs, CFOs, Controllers, and

• ther CPA executives

have about the prospects for their own

• rganizations, their

expectations for revenues and profits, and their plans for spending and employment.

CPA Outlook Index (CPAOI)

5 1Q 2020 Economic Outlook Survey

A reading above 50 indicates a generally positive outlook with increasing activity. A reading below 50 indicates a generally negative outlook with decreasing activity.

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 CPA Outlook Index 74 72 71 69 63 68 69 74 76 75 77 79 81 79 79 76 76 75 72 72 76

74 72 71 69 63 68 69 74 76 75 77 79 81 79 79 76 76 75 72 72 76

6

CPA Outlook Index (CPAOI)

1Q 2020 Economic Outlook Survey

Component 1Q19 2Q19 3Q19 4Q19 1Q20 ∆Q to Q ∆Y to Y U.S. Economic Optimism 72 70 60 64 74 10 02 Organization Optimism 77 75 72 73 78 05 01 Expansion Plans 76 75 72 71 75 04 01 Revenue 82 81 76 76 81 05 01 Profits 75 72 70 71 73 02 02 Employment 71 71 68 70 71 01 00 IT Spending 80 80 80 80 81 01 01 Other Capital Spending 74 74 74 71 74 03 00 Training & Development 75 73 72 72 73 01 02 Total CPAOI 76 75 72 72 76 04 00

7

CPA Outlook Index (CPAOI) vs. GDP

4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 CPA Outlook Index 76 76 75 72 72 72 Change in GDP 3.1% 3.1% 2.0% 2.1% 2.1%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 10 20 30 40 50 60 70 80 90 100

GDP Growth CPA Outlook Index

2.1%

1Q 2020 Economic Outlook Survey

U.S. Economy, Organization and Inflation

8

Optimism for U.S. economy rebounds 11 points

Optimists cite strong employment, low inflation, economic, real estate and equity market strength. Pessimists cite length of recovery,

• ngoing political divisiveness, and

concern about potential effect of election. Coronavirus concerns also cited, with particular impact at end of month – see specified charts.

Organization optimism also rebounds up from 58%

Expansion plans also rebound to 64% overall. Small company expansion plans up from 52% to 62% quarter over quarter. The percentage of companies expecting their businesses to contract eased from 17% to 14%.

Concern about inflation dropped to 17%; concern about deflation dropped to 7%

Concern about labor costs continues to be most significant at 46%. Raw materials cost concerns remained constant at 26%. Interest rate concerns eased from 13% to 12%. Energy cost concerns as most significant risk now at 6%.

61% 66% 17%

1Q 2020 Economic Outlook Survey

9

Optimism & Expansion

The economic

• utlook for the

U.S. economy, your organization, and the expansion plans over the next 12 months

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 U.S. 69% 64% 64% 74% 79% 74% 69% 57% 57% 57% 42% 50% 61% Organization 66% 64% 66% 70% 71% 70% 69% 68% 65% 62% 58% 58% 66% Expansion 67% 64% 65% 71% 72% 70% 70% 67% 66% 63% 61% 59% 64%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1Q 2020 Economic Outlook Survey

Global Optimism – Coronavirus Impact

Market decline due to Coronavirus concerns began near the end of the time that this survey was in the field. This chart provides a breakdown between the early respondents to the survey and those who responded to the final reminder

• n February 25

regarding their

• ptimism about the

global economy.

10 1Q 2020 Economic Outlook Survey

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

TOTAL EARLY RESPONSES LATE RESPONSES 33% 35% 24% 45% 46% 40% 22% 18% 36% Optimistic Neutral Pessimistic

US Optimism – Coronavirus Impact

Market decline due to Coronavirus concerns began near the end of the time that this survey was in the field. This chart provides a breakdown between the early respondents to the survey and those who responded to the final reminder

• n February 25

regarding their

• ptimism about the

global economy.

11 1Q 2020 Economic Outlook Survey

0% 10% 20% 30% 40% 50% 60% 70%

TOTAL EARLY RESPONSES LATE RESPONSES 61% 63% 53% 26% 26% 26% 13% 11% 21% Optimistic Neutral Pessimistic

Organization Optimism – Coronavirus Impact

Market decline due to Coronavirus concerns began near the end of the time that this survey was in the field. This chart provides a breakdown between the early respondents to the survey and those who responded to the final reminder

• n February 25

regarding their

• ptimism about the

prospects for their

• wn organization.

12 1Q 2020 Economic Outlook Survey

0% 10% 20% 30% 40% 50% 60% 70%

TOTAL EARLY RESPONSES LATE RESPONSES 66% 68% 57% 23% 22% 33% 10% 11% 10% Optimistic Neutral Pessimistic

13 1Q 2020 Economic Outlook Survey

Inflation or Deflation?

For your business, over the next 6 months, which are you more concerned about? Inflation

• r deflation?

33% 31% 26% 27% 49% 47% 47% 49% 34% 29% 23% 19% 17% 3% 5% 5% 5% 3% 2% 2% 2% 6% 5% 11% 8% 7%

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Inflation Deflation

14 1Q 2020 Economic Outlook Survey

Inflationary Risk Factors

Which of the following potential inflationary factors represents the most significant risk to your business?

Food costs Energy costs Raw material costs Labor costs Interest rates Other 1Q19 2% 7% 28% 38% 20% 5% 2Q19 3% 7% 29% 39% 18% 5% 3Q19 2% 5% 32% 37% 20% 4% 4Q19 3% 5% 26% 47% 13% 7% 1Q20 1% 6% 26% 46% 12% 9%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Key Performance Indicator Summary

15

Revenues and Profits

Revenue and profit projections both jump

Expected revenue for coming twelve months increased from 3.4% in Q4 to 4.3% Profit projections rebounded from 2.7% in Q4 to 3.3% in Q1

Hiring and Employment

Headcount plans rebound; cost projections hold

Anticipated rate of headcount increase eased from 1.6% to 2.0% Salary and benefit expected cost gains one tenth to 2.6% Healthcare cost projections decreased a tenth from an expected rate of increase of 5.2% to 5.1%

Spending Plans

Spending plans rebound

Expected rate for IT spending gains from 3.5% to 3.6% Other capital spending recovered four tenths from 2.5% to 2.9% Expected rate of increase for training also recovers two tenths, improving to 2.1% Marketing spending plans give back two tenths, easing from 2.0% to 1.8% R&D spending remains constant at 1.7%

1Q 2020 Economic Outlook Survey

16 1Q 2020 Economic Outlook Survey

Key Performance Indicators

Thinking about the coming 12 months, please comment on the probable change for your

• rganization for

each of the following key performance indicators

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Revenue 1.7% 3.0% 2.9% 3.6% 4.3% 3.9% 4.3% 4.8% 5.0% 4.8% 5.0% 4.3% 4.4% 4.2% 3.5% 3.4% 4.3% Profit 0.7% 1.5% 2.3% 3.1% 3.5% 3.2% 3.5% 3.8% 4.4% 4.0% 4.3% 3.4% 3.6% 3.1% 2.8% 2.7% 3.3%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Expected Growth in Revenue and Profits

17 1Q 2020 Economic Outlook Survey

Key Performance Indicators

Thinking about the coming 12 months, please comment on the probable change for your

• rganization for

each of the following key performance indicators

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Employees 0.5% 1.1% 1.3% 1.6% 1.8% 1.8% 1.9% 1.8% 2.1% 2.1% 2.3% 2.0% 1.9% 1.9% 1.7% 1.6% 2.0% Salary & Benefits 1.4% 1.8% 2.1% 2.3% 2.3% 2.2% 2.4% 2.5% 2.7% 2.8% 2.8% 2.6% 2.6% 2.7% 2.4% 2.5% 2.6% Healthcare 5.4% 5.7% 5.6% 6.1% 5.6% 5.5% 6.3% 5.9% 5.6% 5.9% 5.7% 5.3% 5.2% 5.1% 5.1% 5.2% 5.1%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Employees, Salary & Benefits, and Healthcare Costs

18 1Q 2020 Economic Outlook Survey

Key Performance Indicators

Thinking about the coming 12 months, please comment on the probable change for your

• rganization for

each of the following key performance indicators

Pricing & Other Costs Average Change Expected

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Prices Charged 0.8% 1.3% 1.5% 1.8% 1.9% 1.9% 1.9% 2.1% 2.1% 2.5% 2.5% 2.2% 2.1% 2.2% 1.9% 1.8% 2.0% Input Prices 1.5% 2.1% 1.9% 2.4% 2.4% 2.5% 2.4% 2.5% 2.7% 3.2% 3.2% 3.0% 2.6% 2.6% 2.4% 2.3% 2.3%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

19 1Q 2020 Economic Outlook Survey

Key Performance Indicators

Thinking about the coming 12 months, please comment on the probable change for your

• rganization for

each of the following key performance indicators

Spending Plans - IT, Other Capital & Training

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 IT 2.3% 2.6% 2.8% 2.9% 3.0% 3.2% 3.5% 3.6% 3.7% 3.7% 3.6% 3.3% 3.5% 3.4% 3.4% 3.5% 3.6% Other Capital 1.5% 2.1% 2.4% 2.7% 2.6% 2.8% 3.3% 3.1% 3.9% 3.6% 3.5% 3.0% 2.9% 3.0% 3.0% 2.5% 2.9% Training 1.1% 1.3% 1.6% 1.6% 1.8% 2.0% 2.1% 2.2% 2.4% 2.4% 2.3% 2.0% 2.3% 2.1% 1.9% 1.9% 2.1%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

20 1Q 2020 Economic Outlook Survey

Key Performance Indicators

Thinking about the coming 12 months, please comment on the probable change for your

• rganization for

each of the following key performance indicators

Spending Plans Marketing & R&D

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Marketing 1.4% 1.4% 1.4% 1.5% 1.9% 1.8% 1.8% 2.0% 2.1% 1.9% 1.9% 1.9% 2.0% 1.6% 1.6% 2.0% 1.8% R&D 0.9% 1.1% 1.1% 1.5% 1.7% 1.5% 2.0% 2.0% 2.0% 2.2% 2.0% 1.7% 1.9% 1.5% 1.4% 1.7% 1.7%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Hiring Plans

21

Have right number of employees Up 5 points from Q4, back to Q3 level Have an excess

• f employees

Down 1 point from Q4 Have too few, but hesitating to hire Down 1 point from Q4 Have too few and planning to hire Down 2 points from Q4

14% 51% 7% 26%

Remain relatively strong

1Q 2020 Economic Outlook Survey

22 1Q 2020 Economic Outlook Survey

Hiring Plans

Overall staff situation relative to your needs

Given current conditions, how would you characterize your overall staffing situation relative to your needs

(i.e., do you have excess capacity or are employees stretched)?

We have an excess number of employees We have approximately the appropriate number

• f employees

We have too few employees, but are hesitating to hire We have too few employees and are planning to hire Other 1Q19 8% 48% 15% 26% 2% 2Q19 6% 47% 16% 28% 3% 3Q19 9% 51% 13% 25% 2% 4Q19 8% 46% 15% 28% 3% 1Q20 7% 51% 14% 26% 2%

0% 10% 20% 30% 40% 50% 60%

23 1Q 2020 Economic Outlook Survey

Challenges Facing Organizations

Indication of the top three challenges for your organization

• Availability of skilled personnel continues as the top challenge
• Domestic competition moves up 1 spot to #2
• Domestic economic conditions drops to #3
• Domestic political leadership jumps 2 spots to #4
• Regulatory requirements maintains #5 spot
• Employee and benefit costs drops 2 spots to #6
• Developing new products and services moves up 1 spot to #7
• Staff turnover drops 1 spot to 8th place
• Global economic conditions comes in at #9, returning from 7th in

4Q2015

• Materials/supplies/equipment costs returns to the 10th position after

falling off in 2Q2019

10

Top

Challenges YTD

24 1Q 2020 Economic Outlook Survey

10

Top

1Q19 2Q19 3Q19 4Q19 1Q20

1 Availability of skilled personnel Availability of skilled personnel Availability of skilled personnel Availability of skilled personnel Availability of skilled personnel 2 Domestic competition Employee and benefits costs Domestic economic conditions Domestic economic conditions Domestic competition 3 Employee and benefits costs Domestic competition Domestic political leadership Domestic competition Domestic economic conditions 4 Regulatory requirements/changes Regulatory requirements/changes Domestic competition Employee and benefits costs Domestic political leadership 5 Domestic political leadership Staff Turnover Employee and benefits costs Regulatory requirements/changes Regulatory requirements/changes 6 Domestic economic conditions Domestic economic conditions Regulatory requirements/changes Domestic political leadership Employee and benefits costs 7 Materials/supplies/ equipment costs Materials/supplies/ equipment costs Staff Turnover Staff Turnover Developing new products/services/markets 8 Changing customer preferences Domestic political leadership Stagnant/declining markets Developing new products/services/markets Staff Turnover 9 Staff Turnover Developing new products/services/markets Developing new products/services/markets Stagnant/declining markets Global economic conditions 10 Financing (access/cost of capital) Changing customer preferences Changing customer preferences Changing customer preferences Materials/supplies/ equipment costs

Industry, Region and Business-size Outlook

25

Retail trade declines further; wholesale trade improves Manufacturing rebounds; Technology rebounds Construction rebounds; Real Estate eases

Retail trade drops further from 63% to 57% optimistic Wholesale trade improves from 58% to 68% optimistic Hiring for retail is expected to increase at a rate of 1.7% for the coming twelve months, vs. 1.6% in Q4 Manufacturing hiring plans also rebounded from only 0.8% in Q3 and 1.0% in Q4 to now a 2.9% expected increase Technology hiring eased another seven three tenths from 2.1% to 1.4% Construction optimism rebounded from 66% to now 83% optimistic Real Estate and Property held its Q4 gains, easing only a point to now 68%

• ptimistic

Construction hiring plans eased from 2.3% in Q4 to 2.0% going forward from Q1. Real Estate hiring expectations jumped dramatically from 1.8% to 3.8%. Manufacturing optimism recovers from 55% to 59% optimistic Technology rebounds to 76% optimistic after falling to below 50% in Q4

1Q 2020 Economic Outlook Survey

Industry, Region and Business-size Outlook

26

Finance & Insurance eases slightly; Professional Services rebounds Healthcare providers drop; Healthcare –

• thers improves

Finance and Insurance optimism held its gains, easing only a point to now 74% optimistic Professional Services rebounded from 61% in Q4 to 68% optimistic in Q1 However, finance and insurance hiring is now expected to increase at only a 0.9% rate Professional services hiring also eased, now expected to increase at a rate of

• nly 2.1% going forward from Q1

Healthcare provider gave back its Q4 gains declining from 67% to only 54%

• ptimistic in Q1

Healthcare–other also continued its rebound, jumping from 60% to 71%

• ptimistic

Expected hiring by Healthcare providers, which topped the list in Q3 and Q4, now expects hiring to increase at a rate of 1.9% looking forward from Q1

1Q 2020 Economic Outlook Survey

Organization Optimism by Industry

27

66% 61% 61% 69% 56% 40% 54% 63% 57%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Retail Trade

77% 75% 78% 67% 57% 57% 51% 55% 59%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Manufacturing

80% 69% 60% 82% 65% 70% 75% 48% 68%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Technology

72% 76% 63% 63% 89% 75% 52% 58% 68%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Wholesale Trade

1Q 2020 Economic Outlook Survey

Organization Optimism by Industry

28

76% 78% 66% 75% 64% 67% 52% 69% 68%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Real Estate & Property

77% 76% 69% 69% 74% 83% 76% 66% 83%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Construction

78% 82% 84% 79% 65% 61% 67% 61% 68%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Professional Service

79% 69% 78% 72% 74% 77% 67% 75% 74%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Finance & Insurance

1Q 2020 Economic Outlook Survey

Organization Optimism by Industry

29

76% 88% 67% 65% 56% 57% 42% 60% 71%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Health Care - Other

61% 44% 61% 60% 51% 63% 58% 67% 54%

0% 20% 40% 60% 80% 100%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Health Care Provider

1Q 2020 Economic Outlook Survey

30 1Q 2020 Economic Outlook Survey

Expected Employment Change by Industry

Thinking about the coming 12 months, please comment on the probable change for your

• rganization for

Number of Employees

1.9 2.0 2.9 2.1 1.6 1.0 3.0 2.3 2.7 1.0 1.8 0.3 0.6 0.9 1.4 1.7 1.8 1.9 2.0 2.1 2.9 3.8 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Banking Not for Profit Finance and Insurance Technology Retail Trade Trans & Distribution Healthcare Provider Construction Professional Services Manufacturing Real Estate Property Q1 Q4

31 1Q 2020 Economic Outlook Survey

Industry, Region and Business-size Outlook

Midwest – optimism gained another 9% from Q4 to 67% West – optimism gained 4 points to 67% South – gained 7 points increasing to 68% Northeast – recovered 6 points increasing from 55% to 61% optimistic

For employers with > $1 billion in revenues, 8% now have excess employees, while 38% have too few. Of those with too few employees, 20% remain hesitant while 18% are planning to hire. Of those in the $100 million to $1 billion category, 39% say they have too few employees; 28% are hiring; while 11% are hesitant. In the $10 - $100 million range, 42% now have too few employees; of those with too few, 31% have plans to hire; only 11% are hesitant Of employers with revenues < $10 million 40% have too few employees, consistent with Q4; 23% are planning to hire; 17% are hesitant. Expectations for expansion by businesses with revenues < $10 million jumped 10 points to 62%. Plans for companies in the $10 - $100 million category improved 5 points to 64%. Companies in the $100 million to $1 billion range gained 3 points to 65%; those with revenues in excess of $1 billion gave back the 5 points gained in Q4, returning to 63% having plans to expand.

Regional

• ptimism shows

improvement across regions Employment projections by business size and expansion plans by size also reflecting level of optimism

32 1Q 2020 Economic Outlook Survey

Organization Optimism by Region

The rating that best describes your view for the economic outlook for your own

• rganization for

the next 12 months.

1Q19 2Q19 3Q19 4Q19 1Q20 Midwest 64% 60% 54% 58% 67% West 74% 61% 60% 63% 67% South 67% 72% 61% 61% 68% Northeast 50% 53% 59% 55% 61%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

33 1Q 2020 Economic Outlook Survey

Expansion Plans by Business Size

Indicate whether you expect your business to expand or contract over the next 12 months

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 < $10 million 67% 62% 63% 64% 60% 63% 62% 52% 62% $10 to <$100 million 74% 69% 70% 70% 67% 66% 64% 59% 64% $100 million to <$1 billion 72% 71% 73% 62% 67% 63% 54% 62% 65% > $1 billion 76% 78% 74% 71% 66% 64% 63% 68% 63% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

49% of all businesses expect to expand a little in the next twelve months 16% expect to expand a lot 33% expect to contract a little or stay the same 2% expect to contract a lot

34 1Q 2020 Economic Outlook Survey

Business hiring plans by company size

Given current conditions, how would you characterize your overall staffing situation relative to your needs

(i.e., do you have excess capacity or are employees stretched)?

We have an excess number of employees We have approximately the appropriate number of employees We have too few employees, but are hesitating to hire We have too few employees and are planning to hire Other < $10 million 6% 51% 17% 23% 2% $10 to <$100 million 6% 50% 11% 31% 2% $100 million to <$1 billion 8% 51% 11% 28% 2% > $1 billion 8% 52% 20% 18% 2%

0% 10% 20% 30% 40% 50% 60%

Demographics

35

21% 30% 13% 10% 6% 5% 14%

Size of Organization

$0 to under $10 million $10 million to under $50 million $50 million to under $100 million $100 million to under $250 million $250 million to under $500 million $500 million to under $1 billion $1 billion or more 68% 16% 15%

1% 1%

Type of Organization

Privately Owned Entity Not for Profit Publicly Listed Company Other Government 43% 19% 9% 9% 7% 5% 3%

2% 2%

Position

CFO Controller/Comptroller Vice-President/SVP Director/Managing Director President CEO/COO Accounting, Audit, Tax or Technology Manager Chief Officers (CAO/CIO/CTO/CRO/KMO) Other (please specify) 1Q 2020 Economic Outlook Survey

AI AICPA Econ conomic Out utloo

• ok Sur

urvey Sur urvey ey within a a Survey ey

Coronavirus (COVID-19)

Coron

• nav

avirus busi siness s impac pact – all r respon sponse ses compar pared t to l

• lat

ate-mon

• nth respon

sponse ses

Has your business been affected by the outbreak of the coronavirus, the deadly flu-like virus that's caused a public health crisis in China?

1Q 2020 Economic Outlook Survey

55% 5% 0% 1% 1% 25% 12% 1% 73% 4% 0% 0% 1% 17% 4% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% No impact Not sure Significant positive impact Moderate positive impact Slight positive impact Slight negative impact Moderate negative impact Significant negative impact All Responses Late Responses

Co Coronavir irus and nd y your ur bus busin iness

Has your business been affected by the outbreak of the coronavirus, the deadly flu-like virus that's caused a public health crisis in China?

1Q 2020 Economic Outlook Survey

What aspects of your business have been affected?

3% 5% 7% 7% 10% 68%

0% 20% 40% 60% 80%

Decreased sales to other markets as a result of coronavirus-related disruptions. Decreased sales to China markets. Operations of our Chinese facilities shut down or restricted. Other (please comment) Supply chain partner facilities shut down or restricted. NA / Not impacted

Has your business been affected by the outbreak of the coronavirus, the deadly flu-like virus that's caused a public health crisis in China? Other Reasons (Text)

Decline of imports from China Market volatility (Investments) Restricted travel/disruptions General economic decrease Less demand for oil Increased health awareness Potential US domestic exposure Employee distraction

1Q 2020 Economic Outlook Survey

Co Coronavir irus and nd y your ur bus busin iness

What aspects of your business have been affected?

What other adjustments have you made in response to the impact of the coronavirus?

1Q 2020 Economic Outlook Survey

Co Coronavir irus and nd y your ur bus busin iness

0% 4% 4% 14% 78%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Shifting manufacturing to other facilities. Other (please comment) Shifting sourcing to other supply chain partners. Travel restrictions on employees to China or other impacted regions. NA / Not impacted

What other adjustments have you made in response to the impact of the coronavirus? Other Adjustments (Text)

Adjusted production runs Marketing plans changed More local sales leads Investment value reduced Adding quarantine requirements for staff Reducing travel overall, more web meetings Preparing for possible outbreak and monitoring

1Q 2020 Economic Outlook Survey

Coro ronavi virus a s adj djustm tments ts - othe her

Some economists are predicting a downward impact

• n the global

economy because

• f the coronavirus -

have you adjusted your profit and sales outlook because of the potential pandemic?

1Q 2020 Economic Outlook Survey

Coron

• nav

avirus – busine ness forecast t adjus ustm tments nts - al all respo ponse ses c compa pared t to lat ate-month r nth respons nses

25% 62% 11% 2% 42% 51% 7% 1% 0% 10% 20% 30% 40% 50% 60% 70% No, and don't expect we'll need to. No, but keeping an eye on situation. Yes, but currently only minor downward adjustments. Yes, we have made significant downward adjustments. All Responses Late Month Respnses

AICPA Business and Industry Economic Outlook Survey 1Q 2020

For additional information contact:

Kenneth W. Witt, CPA, CGMA Senior Manager Management Accounting Ken.Witt@aicpa-cima.com Cary Jones Associate Manager Management Accounting Cary.Jones@aicpa-cima.com

Thank you!