Friday, December 16, 2005

 

CPA's paint gloomy picture for most Ohioan

Someone call Pollyanna! The bean counters don't really agree that, "Our economic policies have done the trick."

The Ohio Society of CPAs have released their annual poll and although the concerns revealed in the poll aren't novel, they do show that our economic problems aren't just political fluff. An article in the Dispatch's Business section briefly, if accurately, reports that the Ohio CPAs had some dire predictions about health care, the poll offered several other insights.

And, since it is mentioned in the OSCPA's lede, let's start with health care:
One-in-five certified public accountants (CPAs) across Ohio are predicting a significant number of Ohio employers will eliminate health-care benefits for their employees in 2006. Sixty-seven percent of participants responding to The Ohio Society of CPAs 2005 Statewide Ohio Business Poll estimate that health insurance costs would rise between 10 and 20 percent in 2006 causing employers to explore new ways of controlling health-care costs.
Bad news? Pretty obvious! We can expect more families without health insurance, or having to cut back on other consumption in order to pay for a growing share of their premium. A prediction of health care inflation in the 10-20 percent range is very bad driver of this problem. The rule of thumb is that health care inflation is sustainable only if it is less than or equal to wage inflation, and, brother, we can tell you that wages ain't goin' up 10-20 percent this year.

Other results from the poll:
Twenty-six percent of Ohio CPAs expect the economy to improve in 2006. Another 26 percent expect the economy to weaken. Forty-seven percent expect the economy to maintain the current status quo.

According to participants the top deterrents to Ohio’s economic growth are:
  • Rising fuel prices (73 percent)
  • Health-care costs (72 percent)
  • Government regulations (58 percent)
  • Outsourcing (50 percent)
  • Undereducated workforce (49 percent)
We're pretty confident that the CPAs understand the effects of the fuel prices and health care cost, but we are less sure about their understanding of government "regulations" and education. The thing that caught our eye, however, is that the CPAs highlighted "Outsourcing" issue. Businesses by necessity get the accountants involved all the time in "buy or build" decisions, and this poll suggests that the numbers folks have some serious doubts about the decisions being made.

Moving on, the CPAs seem to be bearish about the job market:
When it comes to jobs, half the CPAs surveyed predict little change in job expansion. Thirty percent expect there to be fewer jobs in 2006, while 21 percent predict more jobs. Three-fourths of those responding predict small pay increases, between 1 and 3 percent, for Ohio workers. One-in-five estimate the raises will range between 4 and 6 percent.
Returning to the issue we started with, with raises in the 1-6 percent range and health care inflation in the 10-20 percent range, one can get a sense about why the CPAs see icebergs in the waters.

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