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2017 Virginia Economic Expectations Survey

Stuck in neutral. That’s how VSCPA members view the U.S. economy, according to the Society’s 2017 Virginia Economic Expectations Survey, a partnership with Virginia Business magazine.

Just 52 percent of the 305 respondents answered “yes” to the question, “Do you believe the U.S. economy is moving in a positive direction?” Last year, a similar question — “Do you believe the United States is in a sustained economic recovery?” was answered positively by 53 percent of respondents, and that same question drew a 50–50 split in the 2015 survey. In similar fashion, a slight plurality (41 percent) described themselves as somewhat pessimistic or very pessimistic on their outlook on the national economy, with 30 percent answering somewhat optimistic or very optimistic.

The VSCPA and Virginia Business held a joint panel discussion at the CPA Center in Glen Allen on Sept. 13, with four VSCPA members, representing the state’s four largest metropolitan areas, on the panel:

>> David Cotton, CPA, partner, Cotton & Co., Alexandria (Northern Virginia) >> Martin Einhorn, CPA, partner, Wall, Einhorn & Chernitzer,

Norfolk (Tidewater) >> Clare Levison, CPA, owner, Levison Consulting, Blacksburg (Roanoke area) >> Gary Thomson, CPA, partner, Dixon Hughes Goodman,

Glen Allen (Richmond area)

Twenty-three percent of respondents cited infrastructure as the most pressing issue for Virginia, followed by health care costs (22 percent), government regulation (18 percent), federal budget cuts (14 percent) and education (12 percent). Health care costs (81 percent) and tax climate (48 percent) were the top two issues respondents said needed to be addressed in the 2017 Virginia General Assembly session. Federal spending was a major concern for respondents, with 86 percent answering that the region has not done enough to lessen its dependence on federal money.

“We’ve gone from $117 billion dollars a year in government contracts rewarded in Virginia to $67 billion over an eight-year period of time,” Thomson said. “We’ve already seen a significant dip from either direct sequestration or just a peel-back in government funding.

“The good news is that has created opportunities, particularly when you look at technology, cybersecurity [and] other fields that are beyond the federal government, but even with all that positive reaction, we still are the largest per-capita recipient of federal funds. So it, by nature, will have a significant impact, and it cascades through all of Virginia.” Discussing the economy: To watch the panel discussion, click on the video above in the digital Disclosures issue at vscpa.com/Disclosures or visit vscpa.com/ EconomicExpectationsPanel.

Respondents were pessimistic regarding the national regulatory environment, although they were more bullish on Virginia, with 80 percent rating the Commonwealth’s business climate as good or fair compared to neighboring states. Two-thirds said the regulatory environment was negatively affecting the overall economic climate, while 52 percent expected clients to experience an adverse impact from the new overtime rules from the U.S. Department of Labor.

Nearly four-fifths of respondents (79 percent) said that partisanship at the federal and state level is preventing government from addressing urgent needs that have an impact on business. In other issues:

>> 52 percent of respondents anticipated their company, firm or organization increasing revenues in 2017 >> 66 percent said their business or company is finding an adequate supply of talent in Virginia >> 68 percent support the expansion of the Atlantic Coast Pipeline through Virginia >> 52 percent think capital investments in Virginia will stay the same in 2017, while 37 percent think such investments will increase

>> 36 percent believe Virginia small businesses have access to adequate credit, while 31 percent believe they don’t n