Business executives are predicting the U.S. economy will roar back in the coming year, with revenue and profit growth expectations reaching levels not seen since 2018, according to the second quarter Economic Outlook Survey from the Association of International Certified Professional Accountants.

The survey polls CEOs, CFOs, controllers and other certified public accountants at U.S. companies who hold executive and senior management accounting roles.

Seventy percent of business executives expressed optimism about the U.S. economy over the next 12 months, up from 47% last quarter, as government relief funds, vaccine rollouts and relaxed workplace restrictions have improved business conditions. This marks the first time a majority of survey respondents have held a positive sentiment on the economy since the COVID-19 pandemic began in Q1/20, and it marks the highest level the measure has reached since Q2/18.

There are concerns, however. “Availability of skilled personnel” reemerged as the top-cited challenge for businesses as job recruitment turns up. In addition, two-thirds of business executives expressed concern about inflation, up from 44% last quarter,

Most of the outlook was overwhelmingly positive, however.

• Business executives’ optimism about their own organization’s prospects over the next 12 months rose to 76% from 58% last quarter
• 69% of executives said their companies plan to expand in the next 12 months, up from 58% last quarter
• Profits are expected to grow by 4% in the next 12 months, more than doubling last quarter’s 1.9% forecast, and revenues are expected to climb 5%, up from 3%. Both projections are at their highest level since 2018.
• The hiring picture is also significantly improved, with 33% of executives saying their companies plan to fill positions immediately, up from 19% last quarter. Another 14% said they have too few employees but are hesitant to hire. The percentage of executives who said their companies had too many employees declined from 7% to 4% quarter over quarter.

“What we’re seeing is a broad expectation that things will really open up in the second half of the year,” Ash Noah, CPA, CGMA, vice president and managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants, representing the AICPA and CIMA, said. “Many issues remain, of course. Supply chains are still straining to meet demand in a number of sectors. The global response to the pandemic still contains many uncertainties, which impacts the United States. But we are clearly seeing growing confidence on the part of business executives that the worst is behind us.”

The AICPA survey tracks hiring and business-related expectations for the next 12 months. In comparison, the U.S. Department of Labor’s May employment report looks back on the previous month’s hiring trends.

The CPA Outlook Index — a gauge of executive sentiment within the AICPA survey — now stands at 78, up 10 points from last quarter and at its highest level since Q3/18. The index is a composite of nine, equally weighted survey measures set on a scale of zero to 100, with 50 considered neutral and higher numbers signifying positive sentiment. Every component of the index rose at least six points in the past quarter.

Other key findings of the survey:

• 50% of business executives expressed optimism about the global economy, up from 37% last quarter
• After “availability of skilled personnel,” the top challenges cited by businesses are “materials/supplies/equipment costs” — No. 6 last quarter — and “domestic political leadership.”
• Companies’ input prices are predicted to increase by 4.4% over the next 12 months, up from last quarter’s forecast of 3.1%. Conversely, the prices executives expect their companies to charge are expected to increase 2.7% in that timeframe, up from 1.8% last quarter.
• Sectors experiencing stepped-up hiring compared with last quarter include the category that includes pharmaceutical companies and medical device makers, manufacturing and hospitality and entertainment. Those experiencing increases ramp down include banking and real estate.

The second quarter AICPA survey was conducted from April 27 to May 24 and included 770 qualified responses from CPAs who hold leadership positions such as CFO or controller at their companies.