Accounting
Economic confidence dropped among U.S. finance pros, but up globally
The Association of Chartered Certified Accountants and the Institute of Management Accountants reported a sharp decline Wednesday in economic confidence in the second quarter of the year among accountants and finance professionals in the U.S. and North America, according to a quarterly survey released Wednesday, although globally confidence seemed to be increasing.
The ACCA and IMA’s quarterly
On the other hand, confidence among global accountants and financial professionals improved again in Q2 2024, despite the big drop in North America. Globally confidence among accountants and finance professionals edged up slightly higher in Q2 2024 to just above its historical average. For CFOs, all of the main global indicators rose, with significant gains evident in the New Orders and Capital Expenditure indices.
Confidence among accountants was significantly higher than its historical average in the Asia Pacific region, slightly above in the Middle East and Western Europe, at its average in South Asia, and slightly below average in Africa. The proportion of global respondents reporting “increased costs” eased in Q2 but remains elevated by historical standards. Cost pressures remain high in all regions except the Middle East.
“The American economy has slowed from the heady pace of expansion in the second half of 2023, and the latest results raise the risk of some further moderation over coming quarters,” said Alain Mulder, senior director of Europe operations and global special projects at IMA, in a statement. “The probability that the U.S. Federal Reserve begins easing monetary policy after the summer has increased, although inflation developments over coming months will be crucial.”
That was borne out by a statement at the Federal Reserve meeting Wednesday by Fed chair Jerome Powell saying that “a rate cut could be on the table” at the next meeting in September, although rates were left unchanged for now.
“The GECS points to some further improvement in the global economy in Q2,” said ACCA chief economist Jonathan Ashworth in a statement. “Further signs of a pickup in the important Western European and Asia Pacific regions are encouraging, although the decline in the North American and U.S. indices bear watching closely.’
There were other notable regional differences. Western Europe-based accountants reported another decent increase in confidence as the euro area and U.K. economies continue to stage recoveries. Even the Asia Pacific region experienced a small rise off the back of a huge gain previously, and the New Orders Index increased strongly. The region is benefitting from improvements in the global economy, including in the manufacturing sector and the upward moving technology cycle.
The quarterly survey also asks accountants to rank their top three risk priorities and, for the first time in a year, the economy is not the top concern for respondents working in financial services, although it is close to the highest it has ever been for those in the corporate sector. The Q2 survey responses also reveal how organizations are increasingly struggling to get a grip on cybersecurity, which was ranked as the third-highest risk priority for all sectors combined.
The reconciliation bill passed by the House on May 22 is currently being considered by the Senate, and will likely undergo changes before approval by the upper chamber. To what extent the changes will create stumbling blocks before a final bill is produced and voted on is uncertain, with the increased SALT deduction, Medicaid reforms, and repeal of certain Inflation Reduction Act credits on the line.
While much can change between now and the final version of the bill, the following is a quick overview of some of the provisions:
- Bonus depreciation. First-year bonus depreciation, currently being phased down 20% per year since 2023, is 40% for 2025, and will drop to 0% in 2027. Under the One Big Beautiful Bill Act (or OBBBA) it will be reset at 100% for eligible property acquired and placed in service after Jan. 19, 2025, and before Jan. 1, 2030.
- Section 199A Qualified Business Income deduction. The QBI deduction, created by the Tax Cuts and Jobs Act, is available through 2025 to owners of pass-through entities, sole proprietors and the self-employed. The OBBBA would make the deduction permanent, and the deduction would increase to 23% for tax years beginning after 2025.
- Domestic research and experimental expenditures. The OBBBA would reinstate the deduction available to businesses that conduct research and experimentation. Expenses incurred after 2024 and before 2030 would be eligible.
- Section 179 expensing. The bill increases the limit to $2.5 million and increases the phaseout threshold to $4 million for property placed in service after 2024. The limit and threshold would be adjusted annually for inflation.
- Excess business loss limitation. The bill makes permanent the excess business loss limitation for pass-through entities.
- Pease limitation. The bill would make permanent the repeal of the Pease limitation on itemized deduction, but would introduce a new limitation for taxpayers in the 37% bracket for years after 2025. It would also temporarily increase the standard deduction for tax years 2025 through 2028.
- The Child Tax Credit. The bill makes the CTC permanent and raises it to $2,5000 per child for tax years 2025 through 2028, after which it would return to its present $2,000 with an annual inflation adjustment.
- Federal gift and estate tax exemption. The bill increases the federal gift and estate tax exemption to $15 million, and adjusts it annually for inflation. It is currently set at $13.99 million.
One sector the bill is very positive for is real estate, according to Tyler Davis, president of Saunders Real Estate: “It makes a lot of the TCJA provisions permanent. The estate tax exemption is made permanent and raised to $15 million, and the bonus is back to 100% for the next four years. This allows purchasers to depreciate their investments a lot faster, so it makes deals more attractive for investors and developers. A special provision for industrial manufacturing property under the bill, it is eligible for 100% expensing.”
Photographer: Nikita Sobolkov/nikkytok – stock.adobe.com
This would allow 100% of a project’s cost to be deducted in the first year, making it “hugely attractive,” he said. “The administration wants to bring investment back to the U.S. This will incentivize that process.”
Under the bill, the Section 163(j) business interest deduction would expand and allow more interest to be deducted on qualifying real estate, he said. “And they’re redoing some of the Opportunity Zone rules and boundaries, and are lowering reinvestment thresholds for investments. This should drive more investment into rural communities. And, lastly, there are no Section 1031 changes in the bill. That’s a really positive thing from a transactions and reinvestment perspective.”
Top 25 Firm WithumSmith+Brown acquired Pannel Kerr Forster of Texas on June 1, expanding its geographic reach into Texas and adding energy and oilfield expertise to its practice.
PKF Texas is an accounting, tax and business advisory firm headquartered in Houston. Its 20 partners and approximately 160 team members will join Withum’s roster but remain at their Houston office.
“Joining forces with Withum offers our valued clients and dedicated staff even greater opportunities to thrive and succeed,” Gary Voth, director and chairman of the board at PKF Texas, said in a
PKF Texas also strengthens Withum’s financial services, manufacturing, professional services, technology, private client services, client accounting and advisory services.
‘Uniting our firms enables us to grow a portfolio of energy and oilfield service businesses nationwide,” Patrick Walsh, Withum’s managing partner and CEO, said in a statement. “A piece of our M&A strategy aims to build around existing capabilities to create a more holistic client service approach. Diversity in expertise, experience and culture strengthens our ability to serve our clients and attract talent. Having a presence in the Space City offers us fantastic growth opportunities, and we’re excited to be here.”
Withum is based in Princeton, New Jersey, and reported $577 million in revenue in 2024. It has 25 offices, 226 partners and over 2,300 employees.
In April, Withum added
In the blogs: Whiplash | Accounting Today
Student loan borrowers still at risk of wage garnishment
What the House gave the Senate: Inside the Big Beautiful tax bill
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Economics1 week agoMAGA: protecting the homeland from Canadian bookworms
-
Economics6 days agoElon Musk says Trump’s spending bill undermines the work DOGE has been doing
-
Personal Finance6 days agoHarvard, Trump international enrollment battle affects college applicants
-
Accounting6 days agoHighest paid jobs in corporate accounting
-
Personal Finance1 week agoHow to pay college tuition bills with your 529 plan
-
Economics7 days agoHow young voters helped to put Trump in the White House
-
Finance6 days agoGameStop shares rise as retailer meme stock buys first bitcoin batch, scooping up $500 million
-
Personal Finance6 days agoCrypto in 401(k) plans: Trump administration eases rules