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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Lots of indicators over the last few weeks about how

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Speaker 2: CEOs feel about their economy, and KPMG is the latest

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Speaker 2: with this out. A couple of things that stood out

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Speaker 2: to me. Eighty seven percent of US CEOs feel confident

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Speaker 2: in the US economy, seventy two percent are looking to

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Speaker 2: increase headcount this year, and the biggest risks are regulatory,

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Speaker 2: operational issues, cybersecurity, and tax Super interesting that inflation was

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Speaker 2: not one of those biggest risks now Romaane. What I

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Speaker 2: also find interesting here is that the NFIB, the small

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Speaker 2: business survey, shows something very different. That overall survey is

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Speaker 2: the lowest level since twenty twelve. They're still looking at

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Speaker 2: a super tight labor market, and they're still worried about inflation,

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Speaker 2: and they're really worried about sales. And I'm wondering kind

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Speaker 2: of where the discrepancy lies.

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Speaker 1: This has been a disparity for a while, and we

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Speaker 1: always kind of joke about the big economy and kind

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Speaker 1: of the real economy. If you have mainstream economy here,

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Speaker 1: that's a dispirity to sort out, and you can.

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Speaker 3: Even see it. An inflation, for example, are spending well.

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Speaker 2: Joining us for more is Paul Canope's chair and CEO

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Speaker 2: of KPMG US great to be here, Thank you for

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Speaker 2: joining us. Tell us about the survey and the discrepancy

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Speaker 2: that we see among the guys use survey and little

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Speaker 2: guys well.

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Speaker 4: So I definitely believe that CEOs recognize the challenge with inflation,

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Speaker 4: and we see geopolitical risk and cyber risk as being

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Speaker 4: near term risk, and the near term risks keep evolving.

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Speaker 4: Four years ago was the pandemic, Three years ago it

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Speaker 4: was the Great Resignation. But two, you know, sticky inflation,

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Speaker 4: a really tight labor market are structural things that we

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Speaker 4: think are going to persist for quite some time. And

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Speaker 4: want to say sticky inflation. What I mean by that

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Speaker 4: is inflation has been reduced quite a bit, but at

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Speaker 4: the same time, it's in that range where it seems

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Speaker 4: to be difficult to believe it's going to get back

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Speaker 4: down to two percent anytime soon. So that is a

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Speaker 4: challenge now in the face of all those geopolitical risk

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Speaker 4: and structural changes. We also have a lot of confidence

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Speaker 4: from CEOs, as you noted, and I think a lot

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Speaker 4: of the confidence comes from the fact that the economy

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Speaker 4: has been very resilient. We've navigated these challenges quite well

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Speaker 4: the last four years.

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Speaker 2: So we both the small and the big guys wind

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Speaker 2: up having tightness in the labor market. How are the

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Speaker 2: clients that you surveyed managing that well?

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Speaker 4: Certainly, as you think about going forward, you're trying to

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Speaker 4: make your workforce more productive and efficient. One of the

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Speaker 4: things that we found in our study is that generative

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Speaker 4: AI is in the plans of many CEOs to try

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Speaker 4: to ensure that we get to that point. Also, in

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Speaker 4: some cases, CEOs are not going to be requiring college degrees.

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Speaker 4: They're looking at alternative hiring models, their service delivery models.

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Speaker 1: So when you say though, they're not requiring college degrees,

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Speaker 1: so you're talking about basically lowering the standard. So that

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Speaker 1: scenes to suggests they're still having trouble finding.

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Speaker 4: So I think we've gotten very comfortable remain upso skilling

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Speaker 4: reskilling people. So I don't so much see it as

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Speaker 4: loring standards, but you know, really good people that can

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Speaker 4: be upskilled reskilled to help us get after some of

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Speaker 4: these shortages that are in the market. And again I

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Speaker 4: think some of these shortages will persist for quite some time.

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Speaker 1: But they are still in that hiring mode. They still

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Speaker 1: need a reason and they see sort of potential to

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Speaker 1: increase headcount.

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Speaker 4: Yes, I mean of that study, I think it was

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Speaker 4: thirty two percent of ceo said they would significantly increase

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Speaker 4: hiring the next twelve months, forty percent modestly. Only four

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Speaker 4: percent said they'd be reducing the workforce.

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Speaker 1: One interesting thing, though, that I saw in the study

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Speaker 1: was that a lot of folks are sort of taking

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Speaker 1: a wait and see approach on a lot of things

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Speaker 1: in their business until they see the outcome of the

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Speaker 1: US election, not necessarily on hiring, certainly on M and

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Speaker 1: A and some of the more strategic moves that they

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Speaker 1: would be making.

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Speaker 4: M and A major capital expenditure, sixty two percent of

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Speaker 4: CEO's reported they would wait until after the election to

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Speaker 4: make those kinds of decisions. And I think it's it's swearing, But.

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Speaker 1: Is that different because I'm always told that for a

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Speaker 1: lot of folks, elections don't matter at the end of

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Speaker 1: the day. US policy, while there are changes based on

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Speaker 1: the new president, generally speaking to over arching policies we

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Speaker 1: have are relatively consistent. Is it's so opaque right now

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Speaker 1: that people just feel they cannot make those decisions.

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Speaker 4: I think what it is is that the two biggest

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Speaker 4: obstacles to more M and A right now are higher

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Speaker 4: interest rates being one, and then if you think about

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Speaker 4: the valuations of companies, shifting valuations multiples are very high.

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Speaker 4: Those are huge obstacles. That's where our surveys showed. I

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Speaker 4: think that the election just adds one more layer of

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Speaker 4: uncertainty and complexity onto the M and A market, such

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Speaker 4: that everyone's trying to figure out what will it look

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Speaker 4: like after the election, and will it actually present a

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Speaker 4: better environment for actually doing M and A. I would

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Speaker 4: say too, the will remain that there's a lot of

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Speaker 4: corporate balance sheets, a lot of cash at private equity,

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Speaker 4: and it's the market's going to come back. It's just

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Speaker 4: a matter of the duration of this softness before we

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Speaker 4: let you go.

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Speaker 3: There was one of the things that we been interesting.

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Speaker 2: Only a third of CEOs expect people back in the

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Speaker 2: office five days definitely two third.

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Speaker 3: Man, We've been here five days for a long time.

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Speaker 1: Like that.

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Speaker 4: I know, really so, Alex, it's really interesting. We did

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Speaker 4: that same survey a few months ago, late in twenty

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Speaker 4: twenty three, and sixty two percent of CEOs at the

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Speaker 4: time said that employees you back in the office five

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Speaker 4: days a week over the next five years, and it dropped,

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Speaker 4: as you said, to thirty four percent. A remarkable finding.

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Speaker 4: I think what that means is that hybrid is here,

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Speaker 4: here's day, and hybrid can be anything from one to

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Speaker 4: four days a week theoretically. And I think we're all

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Speaker 4: getting more comfortable with the productivity of our workforce. And

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Speaker 4: we're not we're not an optimal when it comes to

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Speaker 4: hybrid environments, but it's an environment they're all more comfortable

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Speaker 4: with moving forward.

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Speaker 1: All right, Paul, this is a really illuminating.

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Speaker 3: US broadcasting from home. That's what we'll do.

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Speaker 1: I'll bite you. Tom up Chair and CEO of KPMG