KPMG's 2024 CEO Outlook Survey saw AI, the election, and interest rate cuts as key issues the world's biggest business leaders are watching. KPMG CEO Paul Knopp joins Catalysts to discuss the results of the survey and how chief executives across industries are feeling about the overall state of the economy.
Despite economic and political uncertainty ahead, Knopp highlights that CEOs are "very optimistic" about the next three years.
"Upwards of 80% of CEOs are really optimistic about their growth outlook. And I think that's because we've been navigating all kinds of uncertainty the last four years and doing it with with excellence. And now we have some clarity on the direction of interest rates and inflation cooling somewhat. And I think that's giving CEOs some confidence that we can absolutely deal with this environment," Knopp tells Yahoo Finance.
On the hiring front, Knopp notes that the labor market is "very dynamic." He notes that CEOs are concerned about the aging workforce and less students going to college, explaining that these factors will impact the labor force and keep it "somewhat imbalanced and somewhat tight." Knopp adds that talent is a key issue for CEOs as they look to reskill and upskill their employees around generative AI.
With the first rate cut in four years expected to be announced later this afternoon, as well as a monumental presidential election less than two months away, there's lots of questions about which direction the economy will be heading in 2025. So how are America's top CEOs feeling about the state of their companies and the economy as a whole? A new US CEO Outlook survey from KPMG, helping shed light on these questions. Here to discuss, we've got Paul Knopp, who is the KPMG CEO joining us here in studio. Great to see you once again, Paul.
Great to be back.
Absolutely. I mean, just take us into the pulse of CEOs right now and how they're ranking some of these very serious events that are coming forward imminently today with the Fed and then, of course, in a couple of months with the presidential election as well. What is their prioritization right now?
Well, certainly, we're watching things like geopolitical complexity, and that's been obvious for some time now, economic uncertainty, political uncertainty, but amazingly, CEOs are very optimistic about the next three years. Upwards of 80% of CEOs are really optimistic about their growth outlook. I think that's because we've been navigating all kinds of uncertainty the last four years and and doing it with with excellence. And now we have some clarity on the direction of interest rates and inflation cooling somewhat, and I think that's giving CEOs some confidence that we can absolutely deal with this environment, and um, it's going to be interesting to see how it all plays out.
It makes me wonder about some of the challenges that we have seen and certainly the Fed has seen in the labor market, this idea of just tightening up a touch, not necessarily huge layoffs, but we're not hiring, maybe some attrition. What did you hear from CEOs about the path forward for hiring?
Well, it's a very dynamic labor market, and of concern is the aging workforce. Of concern too is less students going from high school to college. And so we expect that labor force to remain somewhat imbalanced and somewhat tight. And talent is a big concern for CEOs right now. They want to make sure they have the right talent in the right places moving forward into the future, particularly with upskilling and reskilling of talent around generative AI and AI. So there's definitely all that at play right now, and we're trying just to make sure that we have the right talent to sustain great business operations for years into the future.
We've increasingly heard from CEOs and in an election year that is expected to be extremely vitriolic, we heard from CEOs about that last year. And so all this in mind, two months away, what are CEOs, from what you're discussing with them, what are they gaming out right now? And an outcome, perhaps, that they're trying to best position their company for?
Sure. So scenario planning is at a premium right now in terms of making sure that you're ready for anything. You know, we as business leaders believe that we can deal with whatever environment we have, whatever outcome that we might have moving forward into the future. And we're definitely making sure that we're ready for whatever might happen. And that includes positioning, tax positioning, running scenarios on what the tax outlook might be beyond 2025 when the TCJA expires, if it does expire, or if they actually put a new law into effect or renew them. So there's every scenario has to be imagined right now, and just trying to prepare for what's going to be reality in 2025. You know, it it's really important too to mention that with all the geopolitical complexity, CEOs are also very concerned about their supply chains and making sure that they are ready for anything, as well as embedding and embracing generative AI into their their businesses. That is top of mind for for many CEOs. It's one of the biggest challenges they have right now.
And just to add to the laundry list of challenges, when you talk supply chains, something that pops to my head immediately is cyberattacks and the potential risk with cyber security, certainly a huge issue that we've seen companies dealing with over the past couple of years. How concerned are CEOs about that, and what are they doing to hedge the risks?
Yeah, so they're very concerned about it. It was one of the top risk in our study this year. You know, the reason they're concerned about is the nature of the risk keeps evolving. With generative AI and AI now, there are deep fakes that you can produce quite easily and quite sophisticated deep fakes. So that's what concerns us, is that these things keep evolving. We have to have amazing awareness of what's happening to make sure that our employees and all of us do not get caught up in cybercrime. So it's really important to make sure that you have preventative measures in place, as well as the detective measures we've historically had. But the technology that's out there right now is really great, but at the end of the day, it's really about awareness of the risk.
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As the election is under two months away, Knopp explains that corporate leaders are focused on scenario planning.
"We, as business leaders, believe that we can deal with whatever environment we have, whatever outcome that we might have moving forward into the future. And we're definitely making sure that we're ready for whatever might happen," he says. He points to tax positioning as one way business leaders are preparing for the election, as Vice President Kamala Harris and former President Donald Trump run on contrasting tax policies.
As AI becomes widely adopted, CEOs are also concerned about the risk of cyberattacks. Knopp explains "we have to have amazing awareness of what's happening to make sure that our employees and all of us do not get caught up in cybercrime. And so it's really important to make sure that you have preventative measures in place, as well as the detective measures we've historically had. But the technology that's out there, right now, is really great. But at the end of the day, it's really about awareness of the risk."
For more expert insight and the latest market action, click here to watch this full episode of Catalysts.
This post was written by Melanie Riehl