KPMG 2023 U.S. CEO Outlook

CEOs today are navigating a U.S. economy that has entered the age of compound volatility: the combination of disruptive risks to growth and structural changes — from sticky inflation to the energy transition to a shifting labor market — that raise the cost of doing business with little margin for error on strategy development and execution.

This year’s KPMG CEO Outlook analyzed insights from more than 1,300 CEOs at large companies globally, including 400 in the United States, to evaluate how they are navigating the challenge of compound volatility.

Business leaders report they remain confident in the long-term growth prospects of the U.S. and global economies, but confidence is more subdued when it comes to the growth prospects of their companies.

CEOs are investing in long-term growth strategies, while remaining agile to take advantage of new opportunities and respond to unforeseen challenges in this environment. They are committed to investments in generative AI and ESG to grow their businesses, and they are prepared to seize transformational M&A opportunities.

They broadly recognize generative AI is a promising pathway to growth that is rapidly accelerating the rate of innovation in our economy. It is a top investment priority for their organizations, and they are mindful to engage their workforce on ethical and effective use of AI.

CEOs are maturing their ESG strategies to advance specific decarbonization, M&A, and sustainable finance efforts, expecting financial returns in the next three to five years. Moreover, failure to engage on ESG risks losing top talent and their competitive edge.

Both generative AI and ESG investments can enhance resilience and improve agility, helping CEOs lead in our more complex and fragmented global economy.

Talent and culture are more important than ever in this fast-changing business environment in which multiple organizational redesigns are the norm and workforce expectations are shifting when it comes to flexibility and purpose. CEOs must foster an ethical culture that embraces change, innovation and smart risk-taking to drive growth; invest in continuously upskilling their people; and protect them from burnout. CEOs want more workers to come into the office and will reward those who do – but need to communicate expectations clearly to build trust.

With the pace of change unrelenting, CEOs are taking bold, decisive action and embracing equity, purpose and sustainability to ensure their organizations achieve their long-term growth ambitions.

Paul Knopp
KPMG U.S. Chair and CEO

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. Inflation, in particular, continues to impact strategy. 

The near-term risks of political uncertainty, disruptive technology, natural disasters and cyber threats add to the volatility. Twenty-eight percent of U.S. CEOs say they feel unprepared for a cyber attack—but not for lack of investment. Those who feel underprepared cite increasing threats, more sophisticated attacks and a shortage of qualified personnel as the main reasons.

More than half of CEOs predict annual growth of less than 2.5% over the next three years. Only 24% expect slightly higher growth of 2.5% to 5%.

CEOs ranked investment in generative AI as a top priority for their organizations. And the majority said they are placing more capital investment in buying new technology (57%) than developing their workforce’s skills and capabilities (43%).

Twenty-one percent of CEOs expect to see a return on their generative AI investments in less than three years, and 62% believe it will take three to five years. KPMG AI and Digital Innovation Vice Chair Steve Chase advises business leaders to evaluate their opportunities by assessing workforce skills, data assets and overall readiness to pinpoint the most promising applications.

“Strategic adoption in targeted areas can optimize operations, spur innovation and strengthen competitiveness. With proper planning and execution, generative AI can transform how work gets done,” he says. 

When asked to identify the top benefit of implementing generative AI in their organization, CEOs cited increased profitability, new product and market growth opportunities, increased innovation and help with fraud detection and cyber attack response.

At the same time, CEOs see generative AI as a double-edged sword when it comes to cybersecurity. Eighty-five percent of U.S. CEOs say AI can help detect cyberattacks while providing new attack strategies for adversaries, playing on perennial doubts that any organization can develop an enduring defense against cyberattacks.

Eighty-one percent expressed concern that the lack of regulations for generative AI within their industry will hinder their organization’s success. Ethical challenges are the most cited obstacle to successfully implementing generative AI—along with cost and technical skills—and 77% of CEOs said the degree of regulation regarding generative AI should mirror that of climate commitments. 

“CEOs are increasingly aware of the ethical risks and rapidly evolving regulations tied to generative AI, and many are taking proactive steps to address them,” says Chase. “A trusted AI program provides a clear road map to navigate the end-to-end AI life cycle with ethical, safe and responsible decision making. With the right governance, policies and controls, organizations can move faster and scale with confidence.”

The ninth edition of the KPMG CEO Outlook—which surveyed 1,325 CEOs between Aug. 15 and Sept. 15, 2023—provides unique insight into the mindsets, strategies and planning tactics of CEOs globally. All respondents led organizations with annual revenues exceeding $500 million, and over one-third had more than $10 billion in annual revenue. The U.S. part of the survey is composed of 400 U.S. CEOs. They came from companies with at least $500 million in revenues, with 36% representing companies with revenues of at least $10 billion and 11 industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology and telecommunications).

Note: Some figures may not add up to 100% due to rounding.

The views and opinions expressed herein are those of the survey respondents and do not necessarily represent the views and opinions of KPMG.

*KPMG U.S. refers to KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.