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Lackluster Year Ahead: Financial Professionals Predict No Change

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Stock market volatility is becoming the norm in the U.S., and in some countries abroad, economic stability is even more difficult to find. With such pessimistic news permeating the media, it is no surprise that financial professionals are less than enthusiastic about the U.S. economy's outlook for the coming year.

Sageworks surveyed financial professionals -- chiefly from accounting firms and financial institutions -- to ask how the economy will have changed one year from now. Their responses were based on interactions with their business clients. The results of this survey show that there is a general sense of malaise in the American business environment.

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More than 54 percent of those polled believe the economy will be in much the same condition one year from now as it is today. According to these respondents, the next year will be very lackluster for American businesses, and we shouldn't anticipate much change in the 9.1 percent unemployment rate. Nearly 22 percent of those surveyed believe the economy will take another turn for the worse, but the remaining 24 percent expect to see some improvement.

This poll contrasts with the data Sageworks collected even earlier this year. When accounting firms were asked whether they expected job growth to be higher in 2011 than it was in 2010, 89 percent of those polled were optimistic about hiring. Likewise, in the fall of 2010, more than 57 percent of financial institutions polled expected to make significantly more commercial loans in 2011 compared to 2010.

The malaise among U.S. businesses and financial professionals is even more surprising given their success so far in 2011. Revenue for privately-held firms across all industries has grown by nearly seven percent since January 1, 2011. Similarly, private companies have learned to get by with less, increasing their profit margins by more than two percent aggregately since 2009 when businesses were under pressure to cut costs. And, since many companies had to resort to layoffs, the average profit per employee concurrently increased by more than fifty percent between 2009 and 2011, reaching a ten-year high at $15,278 per employee.

With such a successful report card this year and the positive results from the previous surveys, it seems reasonable that private businesses and the financial professionals working with them would expect for a more promising next twelve months. Instead, business people are attuned to the pessimistic tone in the economic news. They are hiring and investing conservatively until they see real promise in the marketplace. And given that most of the respondents expect no growth for the next year, they most likely do not see any viable solutions coming out of Washington or any guarantees from Wall Street.

About the Sageworks FPEC Survey
Sageworks surveyed 613 accounting and banking professionals at CPA firms, banks, and credit unions across the U.S. from August 19, 2011 through September 9, 2011. In this single question survey, Sageworks asked each recipient to characterize their sense of what the economy will look like in a year from now as compared to today based on conversations with their business clients.