NYSSCPA Poll Gives Rise to Midyear Economic Rebound for New York State

NEW YORK—Many CPAs across the state anticipate economic improvement in New York by mid-2002, with healthcare and high technology as the industries most likely to experience improved profits this year, according to a New York State Society of CPAs poll measuring economic outlook.

While economists and analysts around the country differ over how long it will take for the U.S. economy to recover this year, 46.8 percent of the 600 Society members who comprised the survey’s random sample indicated they believe the New York state economy will begin to experience improvement by early summer. Thirty-six percent of the responding CPAs said it will remain the same, and 17.2 percent expect worsening conditions. Metro New York City CPAs demonstrated the most confidence in the state economy, with 51.7 percent anticipating improvement. CPAs from Western New York are less certain—27.5 percent see more favorable conditions in six months.

“These results are especially significant because CPAs, through contact with clients in various industries, have an informed perspective on the current conditions and anticipated plans for the new year,” said NYSSCPA President Nancy Newman-Limata.

If, as the Federal Reserve indicated in early January, the economy is beginning to bottom out, the news should come as welcome relief to professions and states across the country. According to the findings, 48.6 percent of the respondents rate current business conditions in New York state as bad; 42.6 percent said they are normal, and only 8.8 percent said they are good. In their local geographic area, CPAs in Western New York are the least upbeat. Approximatly 68 percent said business conditions in their region are bad.

While the economy looks bleak in some areas of the state, the prospects for the health care and high technology industries look promising over the next 12 months, according to the poll.

For the healthcare sector, 37.9 percent of the respondents said profits will improve, 52.9 percent said they will stay the same and 9.2 percent believe they will worsen. High technology can anticipate improved profits, according to 37.4 percent of the respondents. Approximately 46 percent believe they will stay the same and 16.5 percent foresee worsening profits.

Following healthcare and high technology, other sectors that could show the greatest improvement in 2002 include banking and finance (22.3 percent), services (16.8 percent), insurance (16.3 percent) and oil, gas and coal (16.1 percent), according to CPA responses.

The forecasts for other industries are much less favorable, however. According to the findings, 41.6 percent of CPAs statewide said travel, leisure and tourism will experience the greatest decline in 2002, closely followed by commercial transportation with 35.6 percent of the responses. Interestingly, 25.4 percent of the CPAs said insurance will suffer the most, while 16.2 percent said the greatest decline will occur in banking and finance.

The economic outlook for both the travel, leisure and tourism and the commercial transportation sectors comes as no surprise; both industries have been particularly hard hit in the wake of the last year’s terrorist attacks on the World Trade Center.

When asked whether the events of Sept. 11, 2001, will impact the financial services industry and the New York state economy in 2002, 72.9 percent of the CPAs said they will have a negative effect. This response reflects the more broad-based findings of other surveys and studies, including a poll conducted by the National Association for Business Economics late last year. In that survey, 33 economic forecasters estimated that the attacks reduced gross domestic product growth by 1 percent in the third quarter of 2001, 3 percent in the fourth quarter and 1.6 percent in the first quarter of this year. And a new study by economic think tank the Milken Institute finds that the Sept. 11 attacks could result in the loss of more than 1.6 million jobs across the country this year.

As for the long-term consequences, 36.8 percent of the polled Society members said the airline industry will suffer the most as a result of Sept 11. Employment (34.1 percent), insurance (29.6 percent), office space (22.6 percent) and real estate (19.9 percent) will also sustain long-term negative results from the attacks, the CPAs said.

One third of the CPAs (33.8 percent) indicated businesses will move out of New York City at an accelerated rate this year.

On the broader front, the economic policies of President Bush received an overall approval rating. Approximately 22 percent of the CPAs said they are very satisfied with the administration’s handling of the economy, while 51.5 percent said they are somewhat satisfied. The responses from the New York City metro area closely reflect those at the statewide level.

However, statewide, CPAs think last year’s tax rebate had a negative effect on the economy (34.3 percent) rather than a positive one (21.3 percent.). About 44 percent said the tax rebate had no effect. In metro New York, 46.8 percent of CPAs said the tax rebate had no effect on the economy, while 32.5 percent think it had a negative effect and 20.7 percent believe it was beneficial.

The economic poll, sponsored by the Society in prior years, randomly sampled the economic opinions of more than 3,000 members around the state and has a statistical confidence level of +/-3.9 percent at the 95 percent confidence level.

The results included responses from 600 CPA members. Four geographic areas were selected: Metro New York (Rockland, Nassau, Suffolk, Manhattan/Bronx, Brooklyn, Staten Island, Queens and Westchester chapters), Western New York (Buffalo, Syracuse, Rochester and Utica chapters), Upstate New York (Adirondack, Mid-Hudson and Northeast chapters) and the Southern Tier (Southern Tier Chapter).

The poll, conducted by Odesky & Associates of Ohio, was a project of the Society’s Public Relations Committee, whose members made up the survey questions and evaluated the results for future surveys. The committee recommends that the survey be continued annually.

For a complete summary of the CPA poll findings, visit the press room at www.nysscpa.org.