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Despite the slowdown this year of the economic recovery, financial professionals surveyed by the Association of Chartered Certified Accountants and the Institute of Management Accountants believe that business conditions in the U.S. are improving, but they worry about conditions abroad.

The survey by the ACCA and IMA of 2,700 professional accountants found that growth across the world's most developed economies stalled again, and the global economy remains fragile. China's slowing economy dominated the survey findings, although ACCA and the IMA emphasized that there are few signs of the hard landing feared by many commentators. Both confidence and investment showed signs of decline, despite increasing business opportunities.

"The point now is to see how far and how fast the Chinese slowdown will travel," said ACCA senior economic analyst Manos Schizas, who edited the survey. "Our members in Africa tend to feel any fallout from Asia fairly quickly, and there could be implications for other markets that trade with China."

The flip side of the Chinese slowdown is a recovery for the U.S. economy, where investment is on the rise and confidence is high, the survey found, despite significant potential problems.

With growth faltering once again, the finance professionals polled are rethinking their attitudes towards public spending. Accountants working in major economic markets such as the U.S. indicate that fiscal stimulus by their governments is already unsustainable. In only a few markets did respondents believe their governments could spend both robustly and sustainably-places such as Singapore or the United Arab Emirates.

"Finance professionals who responded to this survey were quite at ease with the prospect of austerity until mid-2010," said IMA vice president of research Raef A. Lawson, Ph.D., CMA, CPA. "Then the recovery failed to take off and everything changed. Relatively few believe their governments can make austerity work. There is a limit to what even countries with strong credit ratings and no liquidity constraints, such as the U.S. and China, can do."

In terms of business confidence and optimism among the survey respondents, the U.S. registered only marginal losses in the last quarter. Three out of 10 respondents in the U.S. reported confidence gains in the past three months, while 31 percent reported losses. Similarly, U.S.-based respondents held on to some of their optimism about the global economy, with 43 percent saying they think the global recovery is still on track.

Regional divisions are becoming evident in the U.S. sample. In the Mid-Atlantic, Northeast and West, the last three quarters have seen a fairly consistent recovery in business confidence, while the Midwest and the South have seen a pattern similar to the broader global trend, with part of the confidence gains reversed in the second quarter. As a result, the West now leads the rest of the U.S. for business confidence.

ACCA and IMA believe that part of the reversal in the U.S. appears to have been due to respondents in the public sector. News of mounting job losses in the public sector in early 2012 may have weighed on sentiment at the time.

In terms of fundamentals, survey respondents in the U.S. reported improved financing conditions, a thaw in the labor market, stable levels of capital spending, and more profitable business and investment opportunities arising. However, new orders appear to be falling, a trend that could prove to be a problem if it persists.

Finally, ACCA and IMA asked their members to weigh in on fiscal policy in the U.S. Forty-nine percent of the survey respondents expect government spending to stabilize; however, the latest survey reported a small, but significant, shift in favor of austerity, with 81 percent of respondents saying that government spending must fall over the next five years. This continues a long and strengthening trend of U.S. respondents expressing concerns about the sustainability of fiscal policies.

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