The Accountants Demand Index: How it Works, How to Use It

A new tool from CPA Trendlines for benchmarking and strategic decision-making

Accountants Demand Index, 2006-2026

The Index Gives Accounting Firms a Monthly Read on Demand Pressure

Built from business formation, employment, wages and hours, the measure is best understood as a cycle gauge, validated against MAP survey reality.

By CPA Trendlines Research

The accounting profession has long had benchmarking surveys, revenue rankings and busy-season anecdotes. What it has not had is a monthly economic signal that shows whether demand pressure on firms is rising, easing or splitting apart across clients, labor, wages and workload.

MORE The latest Accountants Demand Index

Errors and omissions should be addressed to News1 @ cpatrendlines.com

That is the purpose of the index. It is not a sentiment poll and it is not a promise that any particular firm will grow. It is a composite measure built from four public federal data series, each rebased to a 2019 baseline of 100 and updated monthly as new government data arrive. Its intellectual premise is straightforward: accounting demand is derived from the conditions that create work for accountants.

Businesses create that demand. New employer businesses generate tax, payroll, bookkeeping, compliance and advisory needs. A larger accounting workforce signals capacity being used. Rising pay indicates competition for talent in a labor-intensive service market. Longer workweeks show utilization pressure at the margin. No single series is sufficient. Together, they form a structured measure of the profession’s operating environment.

Why the four components belong together

The index uses four inputs: high-propensity business applications from the Census Bureau and employment, average hourly earnings and average weekly hours from the Bureau of Labor Statistics. The weights reflect the theory behind the measure. Business formation and sector employment each carry 35 percent. Average hourly earnings carry 20 percent. Average weekly hours carry 10 percent.

Business formation receives the largest weight because it is the clearest upstream signal. High-propensity applications are filings that Census models identify as likely to become employer businesses within four quarters. Each such business is a potential source of payroll work, tax work, bookkeeping, financing support and advisory demand. When formations accelerate, future accounting demand usually strengthens. When formations cool, demand pressure can ease even if firms remain busy.

Employment receives equal weight because workload is not the only demand. It is demand relative to capacity. A stable or declining workforce can make a moderate demand environment feel severe. That is why flat employment in the tax and accounting sector becomes important when business formation remains elevated: the pressure does not disappear; it is absorbed by the same people, different processes, outside staffing, automation, price increases, or some combination of all four.

Wages function as a labor-market signal. In the professional services industry, rising hourly earnings are not merely a cost problem. They also show that firms are competing for scarce capacity. Hours worked receive the smallest weight because they are noisier and shorter-term. They still matter, but mainly as a utilization signal rather than as the structural driver of the index.

What the validation work shows

The internal statistical evidence supports the design. On long-run levels and 12-month averages, three of the four components – business formation, employment and wages – correlate with the composite at 0.90 or higher. Hours are weaker, around 0.54 to 0.58, which confirms their lower weight. On month-to-month changes, the pattern changes: business formation supplies the short-run pulse, with a monthly-change correlation of 0.99 to the index.

That distinction matters. The slow-moving labor data give the index its long-run direction. Business formation gives it its turning points. The result is a measure that should not be overread one month at a time. The validation report estimates single-month volatility at about 2.9 index points, enough to make isolated monthly changes unreliable. The safer readings are year-over-year movement and 12-month trends.

The external tests are stronger than a simple internal correlation. Across 17 independent firm-revenue observations spanning 14 calendar years and two survey systems, the index level correlates with reported net-client-fee growth at r = 0.75, with a p-value of 0.0005. The relationship holds after excluding the COVID anomaly year and under rank-correlation testing. Each 10-point rise in the index corresponds to roughly 1.1 percentage points of additional reported revenue growth.

The Rosenberg series provides the stronger time-series test, with a working estimate of r = 0.79 and R-squared of 0.62 against weighted net-client-fee growth from 2011 to 2024. The AICPA MAP evidence is narrower as a time series but useful as a breadth check. From FY2022 to FY2024, the index’s year-over-year signal cooled from positive 0.28 percent to negative 2.72 percent. Rosenberg weighted net-client-fee growth cooled from 11.31 percent to 8.06 percent. AICPA weighted net-client-fee growth cooled from 8.93 percent to 6.35 percent. Every available AICPA size band and region cooled.

That is why the safest public claim is directional accuracy. The index is credible as a demand-pressure gauge. It should not be described as a certified forecast of firm revenue, tax volume or profits. It can support planning, pricing and scenario work, but it does not replace firm-level benchmarking or management judgment.

The workload signal is not the same as output

One of the most useful distinctions in the validation work is the difference between demand pressure and throughput. The index can move in the opposite direction from IRS return volume per worker. That is not a contradiction. Return volume per worker measures output intensity given available labor. The index measures the pressure coming at the profession from the broader economy.

In 2024 and 2025, sector employment peaked and then drifted down while return volume held up. That pushed throughput per worker higher even as some underlying demand-pressure indicators cooled. For practitioners, the distinction is practical. A firm can be doing more work per employee while the broader demand cycle is cooling. It can also face rising demand pressure before that pressure appears in revenue.

What firm leaders can do with it

The index is useful because it gives firm leaders a disciplined way to separate three questions that are often blurred together. Is demand pressure rising or cooling? Is capacity keeping up? Is revenue growth coming from true demand, pricing, productivity, mergers, or mix?

When the index rises while wages rise, it supports a pricing-power argument. When business formation is elevated but employment is flat, it flags capacity strain. When the index cools but revenue remains strong, it raises questions about pricing, realization, service mix and productivity. When the index and firm sentiment diverge, the divergence itself becomes worth investigating.

This is also where the current profession story becomes more important than the number. The index suggests a market that remains busy but constrained. Business formation remains high enough to feed future work. Wages remain elevated enough to show labor-market pressure. Employment is no longer expanding fast enough to absorb demand through traditional hiring. Weekly hours do not provide a durable solution. The adjustment mechanism is therefore shifting toward productivity.

That means technology, workflow redesign, client selection, offshore staffing, price discipline and a different understanding of capacity. The index does not tell firms which strategy will work. It tells them the environment in which those strategies must be judged.

The proper interpretation

The index should be treated as a monthly cycle gauge for the tax and accounting profession. It is serious enough to cite, but not broad enough to answer every question. It has been validated against two decades of economic history and against firm-reported revenue measures. It captures demand pressure, not output. It is national, not local. It is profession-wide, not firm-specific. It is most reliable over year-over-year and 12-month windows, not isolated monthly moves.

That disciplined interpretation is its strength. For years, the profession has relied on surveys and anecdotes to describe what every practitioner could feel: busier seasons, harder hiring, rising wages, more clients needing advice, and uneven capacity. The index gives those conditions a monthly economic frame. It does not replace the profession’s surveys. It gives them a current context.

The Index That Reads the Cycle

Across 17 independent observations of firm-reported revenue spanning 14 calendar years and two survey systems, the ADI level correlates with net client fee growth at r = 0.75 with p = 0.0005. The index has matched the direction of ten of eleven major economic turns over two decades. The ADI is a demand-pressure gauge, not a firm-level revenue forecast, but it is now defensible in print as a validated cycle indicator for the accounting profession.

The Census Bureau’s Business Formation Statistics program tracks high-propensity business applications — filings that statistical models identify as likely to become employer businesses within four quarters. Business formation carries the highest weight because new businesses are the profession’s most reliable leading indicator. Every new employer is a potential audit client, a payroll client, a tax client. When formation rates surged in 2020 and 2021, accounting workloads followed. When they softened, demand eased with them.

BLS employment in the tax and accounting sector carries equal weight. A large, fully employed workforce means capacity is being utilized. When employment rises alongside business formation, the signal is unambiguous: the profession is absorbing new work. When employment plateaus while formations remain elevated, the resulting tension — more work, not enough people — becomes visible in the index.

Wages in a services profession are not just a cost metric; they are a demand signal. When firms are raising pay, it is typically because they are competing for talent to serve clients they already have or expect to have. Wage acceleration preceded the profession’s 2022 and 2023 peak busy-season strain by several quarters.

Hours data carries the lowest weight and for good reason: it is the noisiest of the four series and shows the weakest long-run correlation with the composite. Its role is to capture intensity at the margin — when existing workers are being asked to work longer, it registers a short-term pressure signal, not a structural one.

Internal Structure

On the long-run trend, three of the four components track the composite tightly. Business formation, employment, and wages all correlate with the index at r = 0.90 or higher across the full series from March 2006 through May 2026 (242 monthly observations). Hours is the weak member at r = 0.54 to 0.58 — which is precisely why it carries the lowest weight.

On month-over-month changes, the picture inverts sharply. Business formation dominates the index’s short-run pulse at r = 0.99 monthly and r = 0.97 year-over-year. Employment, wages, and hours barely move the needle at the monthly level. The implication: the ADI inherits its long-run direction from the slow-moving labor data and its short-run turns from new business formations. Monthly volatility runs about 2.9 index points at one standard deviation — too high for single-month turn calls. The trustworthy timescales are year-over-year and 12-month rolling.

Twenty Years of Directional Accuracy

If the ADI is a meaningful cycle indicator, it should register the major economic turns of the past two decades in the right direction. Across eleven explicit directional tests against known events, ten match expectations.

The index fell during the 2008–2009 financial crisis. It rose modestly during 2020, reflecting the surge in PPP and CARES Act work that offset lockdown drag. It spiked in 2021 with the Great Resignation and the business-formation boom. It peaked at 122.28 in 2023 — the year firms most loudly reported busy-season strain — and cooled in 2024 as the cycle softened, matching what Busy Season Barometer respondents were reporting in real time. The single miss is 2010, when the index fell another half-point even though the technical recovery was underway. That is a margin call, not a directional failure.

Year	Condition	Expected	ADI Direction	Result
2008	Financial crisis begins	Down	Down (?5.67)	Match
2009	Recession trough	Down	Down (?3.18)	Match
2010	Recovery should begin	Up	Down (?0.46)	Miss
2018	TCJA implementation	Up	Up (+3.00)	Match
2020	COVID + PPP/CARES surge	Up	Up (+5.17)	Match
2021	Great Resignation, BFS surge	Up	Up (+11.44)	Match
2022	Inflation, wage spiral	Up	Up (+0.32)	Match
2023	Peak busy-season strain	Up	Up (+5.36)	Match
2024	Cooling cycle begins	Down	Down (?3.33)	Match
2025	Continued cooling	Down	Down (?0.05)	Match

 

External Validation Against the MAP Surveys

The strongest test of the ADI is whether it tracks revenue growth as actually reported by accounting firms. Two surveys provide that test: the AICPA PCPS MAP biennial and the Rosenberg MAP/National Survey annual. Both ask firms to report year-over-year change in net client fees, but they use different methodologies. Rosenberg reports a firm-count-weighted average; AICPA reports firm-level medians. AICPA’s approach is more robust to outlier firms; Rosenberg runs about one to two percentage points hotter on average. Despite that methodological gap, both surveys land on the same scatter against the ADI.

Combined Dataset: 17 Observations Across 14 Years

The Rosenberg archive yielded 12 matched data years (2011, 2013, 2014, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023, 2024). The AICPA archive yielded five additional years not covered by Rosenberg’s middle-band cleanup (2011, 2013, 2015, 2022, 2024). Combined, the validation set carries 17 independent observations against the ADI level. Each ten-point rise in the ADI corresponds to roughly 1.1 percentage points of additional reported fee growth.

Comparison	r	p-value	n	Reading
Combined Rosenberg + AICPA vs ADI level	0.751	0.0005	17	Strong, highly significant
Combined, excluding 2020 (COVID)	0.792	0.0003	16	Stronger without pandemic anomaly
Combined Spearman rank (?)	0.709	0.0014	17	Robust to linear assumption
Rosenberg only	0.788	0.0024	12	Longest single-survey series
AICPA only	0.749	0.146	5	Same magnitude, smaller n
Pre-2020 era	0.651	0.041	10	Significant in the pre-pandemic period
Post-2020 era	0.634	0.127	7	Same magnitude, smaller n

The 2022–2024 Reality Check

The FY2022-to-FY2024 cooling cycle provides the clearest contemporaneous test. Rosenberg weighted NCF growth cooled from 11.31% to 8.06%, nearly matching the ADI’s movement in magnitude. AICPA weighted fee growth cooled from 8.93% to 6.35%, a directional confirmation across 7 of 7 available size bands and all 4 regions surveyed.

Metric	FY2022	FY2024	Change	Interpretation
ADI YoY	+0.28%	?2.72%	?3.00 pts	Demand pressure cooled
Rosenberg weighted NCF growth	11.31%	8.06%	?3.25 pts	Revenue growth cooled nearly point-for-point
AICPA weighted NCF growth	8.93%	6.35%	?2.59 pts	Directional confirmation
AICPA size bands cooling	—	7 of 7	All bands	Broad size-band confirmation
AICPA regions cooling	—	4 of 4	All regions	Broad geographic confirmation

The IRS Throughput Divergence Is a Feature

Comparing the ADI to IRS individual returns received per NAICS 5412 worker produced an apparent puzzle: from 2023 to 2025, ADI declined while returns-per-worker rose. The series moved in opposite directions.

That divergence is the right divergence. The ADI is a demand-pressure index — what is coming at the profession. Returns-per-worker is throughput intensity — workload divided by available labor. In 2024 and 2025, NAICS 5412 employment peaked and then drifted down. Fewer workers absorbing similar return volume drives returns-per-worker up even as the underlying demand pressure was easing. The two metrics tell different stories from the same underlying data, and a reader who treats them as the same will reach the wrong conclusion.

Year	ADI Jan–Apr avg	IRS Returns/Worker	NAICS 5412 Emp (000s)	Status
2023	121.27	119.85	1,144.3	Final
2024	119.80	121.47	1,145.4	Final
2025	117.52	124.74	1,127.4	Final
2026	121.66	118.60	1,129.9	Provisional

2026 figure preliminary from Bisignano Senate Finance testimony, April 15, 2026.

 

What the Index Is For — and What It Is Not

Use the ADI for:

Reading the cycle. Direction and magnitude of year-over-year change anchor a story about whether demand pressure is rising or easing across the profession.

Cross-referencing with sentiment. When ADI direction matches Busy Season Barometer mood, the reading is reinforced. Divergence is itself a story.

Comparing recoveries. The 2009 trough, 2020 dip, and 2024 cooling can be set side by side because the index is rebased to a common 2019 baseline.

Component decomposition. When ADI moves, the four-component breakout shows whether the story is business formation, employment, wages, or hours.

Planning and pricing context. When ADI rises while wages rise, it supports a pricing-power argument. When ADI cools, firms should be more cautious about fee increases unless their niche demand is stronger than the market.

Do not use the ADI for:

Forecasting individual firm revenue. The index measures profession-wide pressure, not firm-level workload. A firm growing 15% in a year, the index reads flat, is not contradicting the index — it is outperforming a trend.

Predicting IRS return volume. The IRS workload proxy is a separate metric that can move opposite to ADI when employment is the dominant variable.

Single-month decisions. Monthly volatility (about 2.9 points one-standard-deviation) is too high; the year-over-year and 12-month rolling readings are the trustworthy ones.

Geographic or firm-size segmentation. The index is national and profession-wide.

Replacing the MAP surveys. AICPA and Rosenberg capture firm-level realities — staffing ratios, compensation benchmarks, partner income — that no macroeconomic composite can reach. The ADI is a higher-frequency complement to those surveys, most useful in the months between biennial and annual publications.

Q: What is the Accounting Demand Index, and what does it actually measure?

The ADI is a monthly composite of four federal data series — high-propensity business applications, NAICS 5412 employment, average hourly earnings, and average weekly hours — combined and rebased to a 2019 baseline of 100. It measures demand pressure on the accounting profession, not firm revenue or profitability. When the index rises, the operating environment for accounting firms is strengthening. When it falls, pressure is easing.

Q: How accurate is it?

Against seventeen independent observations of firm-reported net client fee growth spanning fourteen calendar years and two survey systems, the ADI correlates at r = 0.75 with p = 0.0005. It has matched the direction of ten of eleven major economic turns since 2006, including the 2008 financial crisis, the 2020 PPP surge, the 2021 business-formation boom, the 2023 peak, and the 2024 cooling. The one miss — 2010 — was a margin call on a recovery that arrived slowly.

Q: Why does the ADI sometimes move in the opposite direction from IRS returns-per-worker?

Because they measure different things. The ADI measures demand pressure — what is coming at the profession. Returns-per-worker is throughput intensity — how much work existing staff are processing. When employment falls while return volume holds steady, throughput per worker rises even as underlying demand pressure eases. From 2023 to 2025 that is exactly what happened. The two metrics are related but they tell different stories, and treating them as equivalent produces the wrong conclusion.

Q: What is the December dip in the forecast, and should firms be worried?

No. The December 2026 forecast of ?1.6% year-over-year is a calendar artifact. December 2025 carried an unusually strong reading; the negative comparison is a function of that tough base, not a signal of demand collapse. The smoothed index holds above 122 through the entire forecast window, and January 2027 rebounds to +6.9% as the base effect reverses. The underlying trajectory from June 2026 through May 2027 is positive throughout except for that one month.

Q: Can a firm use the ADI to forecast its own revenue?

No, and that distinction matters. The index is national and profession-wide. The variance within any tier of the profession in any given year dwarfs the variance the ADI explains across the cycle. A firm growing 15% in a year the index reads flat is not contradicting the index — it is outperforming a trend. The ADI is a context-setter for conversations about workload, hiring, pricing, and capacity. It is not a firm-level planning tool.

Q: How does the ADI compare to the AICPA and Rosenberg MAP surveys?

The surveys and the index do different things and work best together. The MAP surveys capture firm-level realities — staffing ratios, compensation benchmarks, partner income, regional variation — that no national composite can reach. The ADI provides a monthly reading between the biennial AICPA publication and the annual Rosenberg publication, when the profession has no other current signal of where the cycle stands. Each ten-point rise in the ADI corresponds to roughly 1.1 percentage points of additional NCF growth in the surveys — which is why directional agreement between the index and the surveys is the right thing to check, not precision matching.

Q: How often is the index updated, and how reliable are the most recent readings?

The ADI is updated monthly, typically within two weeks of the BLS and Census releases that feed it. The most recent two to three months carry a provisional designation because BLS and Census regularly revise their preliminary figures. May 2026’s reading uses actual employment and business-formation data but carries forward April’s wage and hours figures, pending the July BLS release. Revisions are applied when final data arrive. Year-over-year and 12-month rolling readings are the most reliable; single-month readings carry roughly 2.9 points of one-standard-deviation noise and should not be used for turn calls.

 

Posted on June 10, 2026