Less executives in corporate America are positive about the economy moving forward and according to the America Institute of CPAs’ Economic Outlook Survey, rising interest rates are a cause for some of the concern.
The results of the quarterly survey revealed that 69% of executives said they’re optimistic about the economy over the course of the next 12 months, but this is down five percentage points from the second quarter and 10 percentage points from the first. Even though expectations for revenue was up 4.3% and profits up 5%, optimism still slipped as the survey also cited tariffs as another concern.
“It’s unusual to see a decrease in U.S. economic optimism when key performance indicators such as profit and revenue are perceived to be on the rise,” said the AICPA’s Arleen Thomas. “On the one hand, business executives are encouraged by the impact of federal tax reform and reduced regulation at home, but there is some concern about trade wars, interest rate hikes and other factors that could contribute to a global economic slowdown.”
With no signs of the economy slowing any time soon, it appears that a steady diet of rising rates is in order, according to Boston Federal Reserve President Eric Rosengren.
“Gradually increasing over the course of this next year makes sense,” Rosengren told CNBC in an interview. “If things work out well for the economy, and that’s what I expect and hope, then we’ll be in a situation where we need to have somewhat restrictive policy over time.”
With a monetary policy meeting slated for later this month, Rosengren also forecasts that the current federal funds rate will float between a range of 2.5% to 3%. After the two previous rate hikes earlier this year, the current federal funds rate stands at 2.