Last year, the word “recession” did not appear anywhere in KPMG’s U.S. CEO Outlook report, and “inflation” was mentioned only once.
The 2022 report tells a completely different story. A majority of surveyed CEOs, 91%, anticipate a recession, with only one-third believing it will be short and mild. At the same time, nearly three-quarters of chief executives worry that rising inflation and living costs will affect their ability to retain talent.
Such data underscore how CEOs are balancing an unusually long list of concerns with guarded optimism about the future, says Paul Knopp, CEO and chair of KPMG U.S.
The survey found that half of U.S. CEOs are considering workforce reductions through layoffs or hiring freezes in the next six months. However, Knopp believes business leaders now understand that job cuts are often too costly for companies counting on long-term growth, especially when structural imbalances in the labor force suggest the market will remain tight.
Having regretted making deep job cuts in the past, he tells Fortune, many leaders now see cutting labor costs as a short-term fix that can hamper a company’s ability to “take off on the back end of a recession very quickly.”
CEOs’ intense concern about maintaining an engaged workforce is evident in the report, representing the views of 400 chief executives of large U.S. companies. Pandemic fatigue among workers tops the list of the most pressing worries for CEOs. Accordingly, despite the dark clouds in the economic picture, they’re still experimenting with flexible schedules and remain focused on establishing a shared corporate purpose to offset the risk of burnout, the report states.
On the bright side, American business leaders remain overwhelmingly optimistic about the potential for corporate growth: 83% of CEOs express faith in the resilience of their companies to withstand economic jolts, and 80% feel confident about the domestic economy.
Predictions for the next three years show an even more upbeat mood, with 93% of CEOs predicting a strong domestic economy and 95% envisioning growth for their companies, primarily through mergers and acquisitions. In regard to the global economy, however, only 72% and 71% of CEOs feel positive about short- and long-term prospects, respectively.
Although ESG efforts have received heightened scrutiny in recent years, the majority of CEOs say they may have to pause some of these initiatives because of recession pressures. But Knopp believes those breaks will be short-lived if they happen at all. That’s because 70% of chief executives report that pursuing climate, diversity, and equity goals improved their company’s financial performance—nearly double the share (37%) who said the same last year.
As for boards, Knopp advises that directors focus on strategy, pay attention to how their executives deal with short-term economic setbacks, and tap new board members with expertise in M&A, ESG, and cybersecurity. “Ensure that organizations are not going to be outmaneuvered by competitors that are coming up with more innovative technologies,” he says.
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FAQs
“A large majority of CEOs continue to expect a US recession ahead—but that consensus receded notably over the course of 2023,” said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board.
What are America's top CEOs worried about as they look ahead to 2023? ›
CEOs see risks to growth coming from all directions, underscoring the impact of increased disruption and the challenges of navigating long-term structural change. Structural changes abound – inflation, high cost of capital, energy transition, climate change, labor market shifts.
Do CEOs think recession is coming? ›
CEOs in both the United States and globally are bracing for a recession and elevated inflation. Despite these issues topping their worry list, just 37% of US CEOs say they are prepared for a recession, and 34% are prepared for high inflation, according to a survey from The Conference Board.
Is the US at risk for a recession in 2023? ›
The U.S. economy avoided the recession forecast for 2023. Experts now say a soft landing or mild recession is possible in 2024. These tips can help investors prepare for the unexpected.
What do experts think will cause a recession in 2023? ›
2023 was a year in which many experts got a lot of things wrong about the U.S. economy. Many economists believed the Fed's battle to tame inflation with a succession of interest rate hikes would trigger high unemployment and a recession. Instead, inflation was cut in half.
What are CEOs concerned about in 2023? ›
CEOs expect more pressure over the next three years than they experienced over the previous five from technology, climate change and nearly every other megatrend affecting global business.
What CEOs are worrying about? ›
While complex problems like global expansion, technological disruption, supply chain integrity, and regulation are and will be ever-present, it's the deeper sophisticated challenges, the ones that are essentially grounded in leadership and not technical matters, that continue to be the most fundamentally challenging— ...
Do around 90% of CEOs believe a recession is coming? ›
Nearly all financial services CEOs we spoke with, 89 percent, agree a recession is inevitable in the next 12 months.
What billionaire predicts a recession? ›
Omega Advisors billionaire CEO and chairman Leon Cooperman warned Wednesday that while the U.S. economy is "doing fine" at the moment, there is risk of a recession in 2024. Cooperman said a recession in 2024 would be due in-part to the effect inflated energy prices and quantitative tightening would have over that time.
Is the US headed for a recession 2024? ›
“As a result, the leading index currently does not signal recession ahead. While no longer forecasting a recession in 2024, we do expect real GDP growth to slow to near zero percent over Q2 and Q3.”
After inflation, high interest rates, unattainable housing prices and other economic factors, 50 percent of U.S. adults say their overall personal financial situation is worse than it was in November 2020, according to October 2023 Bankrate polling.
Was 2008 the worst recession? ›
The Great Recession of 2008 to 2009 was the worst economic downturn in the U.S. since the Great Depression. Domestic product declined 4.3%, the unemployment rate doubled to more than 10%, home prices fell roughly 30% and at its worst point, the S&P 500 was down 57% from its highs.
How long will it take to recover from 2023 recession? ›
Morgan Stanley Research strategists think U.S. corporate earnings could decline 16% in 2023 but stage a comeback in 2024 and 2025.
How long do recessions last? ›
According to the National Bureau of Economic Research (NBER), the average length of recessions since World War II has been approximately 11 months. But the exact length of a recession is difficult to predict. In general, a recession lasts anywhere from six to 18 months.
How can the US avoid a recession in 2023? ›
In 2023, consumers spent 5% more. As consumers spent, companies sold more, and as companies sold more, additional workers were hired. This reinforcing circle kept the economy going. The typical script when the Fed raises interest rates wasn't followed by the economic actors.
What are the CEO worries in 2024? ›
The biggest fear for 2024: CEOs expect a recession. US CEOs: They rank recession as the #1 external concern for 2024. Global CEOs: Recession is also the #1 external concern among executives globally.
What are CEOs talking about in 2024? ›
44% of US CEOs see GenAI boosting profit this year
US CEOs taking part in PwC's 27th Annual Global CEO Survey say this is the year when generative AI shows tangible results. They say it will boost employee efficiency, make their products better and boost profits.
What is the future outlook for a CEO? ›
Demand for Chief Executives is expected to go up, with an expected 56,740 new jobs filled by 2029. This represents an annual increase of 3.12 percent over the next few years.
