With concerns about inflation and a potential recession ticking down, business executives have grown guardedly less pessimistic about the U.S. economy’s prospects, according to the third-quarter AICPA & CIMA Economic Outlook Survey. The survey polls chief executive officers, chief financial officers, controllers and other certified public accountants in U.S. companies who hold executive and senior management accounting roles.

Only 29% of survey respondents expressed optimism about the outlook for the U.S. economy over the next 12 months, While modest, that’s the highest level since the first quarter of 2022 and a jump from last quarter’s measure of 14%. U.S. business executives’ views of the global economy also improved somewhat, with 17% expressing optimism, up from 11% last quarter.

According to the survey, 16% of business executives said they still expected a recession by year end, a dramatic drop from the 47% who expressed that sentiment last quarter. The percentage of those who said they believed the economy is already in recession also fell sharply. Twenty-seven percent still expect to see a recession in 2024.

Commenting on this, AICPA & CIMA executive vice president for business engagement, Tom Hood, said: “Most of the indicators we track are up this quarter, buoyed by greater prospects for a soft landing for the economy and a sense that inflation may have peaked.

“There’s still substantial wariness about the economic outlook, however. One strong positive is that half of business executives now expect to see expansion in their organisations over the next 12 months.”

Inflation, the top business challenge identified within the survey since the end of 2021, was supplanted this quarter by “availability of skilled personnel,” a reflection of the continued tightness in the labor market and executives’ perception of a lingering skills gap in the workforce.

The most recent meeting of AICPA & CIMA’s Future of Finance Leadership Group of Fortune 500 finance executives found transformation and talent were the top barriers to achieving growth as they come through the recession.

Some 39% of business executives said their company currently has too few employees, down from 43% last quarter. Twenty-five percent said they planned to hire immediately, while 14% said they were hesitant to hire because of economic uncertainty.