In sharp contrast to recent reports about sagging consumer confidence, optimism about the U.S. economy has continued to increase among chief financial officers and senior-level executive Certified Public Accountants, according to a new survey conducted by the American Institute of Certified Public Accountants (AICPA) and the University of North Carolina’s Kenan-Flagler Business School.

Survey results suggest the U.S. economy might have stabilized in the second quarter of 2009.

"The confidence rally among CPA financial executives continued for the second consecutive quarter," said Arleen Thomas, AICPA senior vice president for member competency and development.

The overall improving confidence was the result of both growing optimism and declining pessimism. Optimism rose in the current quarter to 26 percent from the 19 percent of respondents who had said that they were "optimistic" about the U.S. economy three months ago.

Forty-one percent of CPA executives expressed pessimism about the U.S. economy over the next 12 months, a decline of 12 percentage points from the second quarter’s 53 percent of respondents who said they were "pessimistic" or "very pessimistic." Thirty-three percent were "neutral" compared to the 28 percent recorded in the last survey.

The survey showed that optimism rose because of improving business indicators and demand, according to Thomas.

At the same time, financial executives extended their expectations for a complete turnaround in the U.S. economy to 2010 and that is causing continued restraint in spending and hiring.

Thirty-nine percent of the survey’s respondents said they were "slightly more confident" about the economy than they were last quarter. However, 62 percent still expect the downturn to last until 2010. Twelve percent said the recovery would occur in 2011 or later.

"When you compare these results to 83 percent of respondents who in the first quarter said they were pessimistic about the economy, the trend is definitely in the right direction," said Mark Lang, the Thomas W. Hudson, Jr./Deloitte and Touche L.L.P. Distinguished Professor of Accounting at UNC Kenan-Flagler. "However, CPA executives are not projecting significant increases in sales and profits and are not projecting significant increases in the types of spending that will fuel a rapid recovery."

Increases in consumer spending (32 percent) and improvement in the housing market (25 percent) will be the two primary drivers of business improvement, survey respondents said.

• 16 percent said they were looking for an increase in manufacturing to be a primary driver of improvement in their own businesses
• 42 percent expect a decrease in revenue over the next 12 months, an 11 percentage point decline in negative revenue expectations from 53 percent in the first quarter
• 34 percent expect a reduction in employment, down 11 percentage points from the 45 percent who three months earlier had said they expect the number of employees to decrease.

Sixty-two percent of respondents say they expect prices they charge will remain the same or decrease. Similar to the last quarter, more than half expect their salaries and corporate benefits packages, excluding healthcare costs, to the stay the same or decrease.

The survey results indicated that customer demand and healthcare costs are the top challenges facing companies. Access to capital has dropped from No. 2 to No. 3 in comparison to the second quarter. Avoiding layoffs dropped from No. 7 to No. 9.

The AICPA is the national, professional association of CPAs, with more than 360,000 CPA members in business and industry, public practice, government, education, student affiliates, and international associates. It sets ethical standards for the profession and U.S. auditing standards for audits of private companies, nonprofit organizations, federal, state and local governments.

The third quarter AICPA Business and Industry Economic Outlook Survey was conducted via an online questionnaire from July 22-Aug. 9, 2009, and included 1,093 CPAs who hold leadership positions such as chief financial officers, or controllers in their companies. The overall margin of error was plus-or-minus 3 percentage points. Full poll results are available online.