42% of American CEOs bullish on economic growth

According to a recent survey conducted by CEOWORLD magazine, 42% of American CEOs are optimistic about the economy and expect it to improve in the next 12 months. This percentage shows a significant increase from last year’s 33%. The survey was conducted among 126,500 CEOs from 105 countries, including 38,000 from the United States. Additionally, the survey found that American CEOs are more confident about longer-term growth.

In a statement released by CEOWORLD magazine yesterday, they revealed that 42% of American CEOs are optimistic about their business growth in the next three years, while only 26% are confident about their revenue growth in the next 12 months. The CEOs were found to have been actively considering the need for the long-term transformation of their firms, in line with the global trend. 42% plan to change their business model, while 38% have already adopted new technologies to improve product quality and processes. 26% have also built their teams for technology development.

The United States faces various external threats as inflation and economic volatility loom, including technological disruptions, climate change, and geopolitical tensions. These concerns have become more intense compared to previous years, negatively impacting the business environment. Certain industries, such as industrial manufacturing and automotive sectors, are particularly vulnerable to the disruptions caused by geopolitical conflicts. Meanwhile, the technology and energy sectors are bearing the brunt of economic instability, further complicating their operational landscapes.

According to the report, energy efficiency and decarbonization have become a top priority for many American CEOs. Around 68% of CEOs stated that their companies have improved in energy efficiency. Additionally, artificial intelligence (AI) has gained significant popularity among CEOs, with nearly 7 out of 10 respondents believing that generative AI would help improve their own work efficiency within the next 12 months. Around 72% of CEOs expect the same for their workers. Furthermore, over half of the CEOs surveyed (52%) expect to see a revenue boost, while 60% believe that AI could help improve their profitability.

Beyond the US-China friction, the report highlights the compounding impact of China’s economic deceleration and demographic aging. These factors propel manufacturing migration from China to burgeoning locales such as India, Mexico, Vietnam, and Indonesia—an imperative move to align with evolving market dynamics.

The report emphasizes the importance for American businesses to reevaluate their strategic positioning in the value chain. Although the country has excelled in industrial manufacturing, technology, and services, it is crucial to expand its focus to fields like electrical and electronic equipment, semiconductors, and pharmaceuticals. To stay competitive in the global market, diversifying beyond industrial manufacturing is not just a wise move but a necessity. The report cautions that America’s economy is overly dependent on industrial manufacturing, technology, and services, including banking and finance, which poses risks due to this reliance. Therefore, diversifying development paths is crucial.

However, the 38,000 American CEOs responding to this year’s survey were more hopeful about the growth of the global economy compared to the previous year. 21% of CEOs are concerned about their company’s ability to survive in its current state for over a decade. This is due to various global megatrends, including technology and climate change, which are leading CEOs to feel the need for reinvention. Furthermore, CEOs anticipate more pressure in the next three years than they have experienced in the previous five. Small company CEOs are more likely than their larger counterparts to feel that their company’s viability is at risk.

CEOs are under increasing pressure to reinvent their business models due to various factors such as technology, customer preferences, and climate change. This pressure is expected to intensify over the next five years compared to the previous five years. CEOs anticipate that these factors will have a significant impact on how they create, deliver, and capture value. The only factor that is expected to decrease in relative terms is the impact of supply chain instability.

The importance of certain trends has been growing despite a decrease in CEO perception of exposure to several near-term threats compared to last year. However, CEOs in some geographical regions still see some areas of concern. For instance, inflation remains the top concern for CEOs in the United States, even though it has decreased globally. Similarly, geopolitical threats are still a significant concern for CEOs in Central and Eastern Europe and the Middle East, although they have decreased for global CEOs overall. This might be because companies have taken measures to insulate themselves from some conflicts while others still have an unclear impact. In Western Europe, CEOs are particularly concerned about cyber risk over the next 12 months, especially in France and Germany, where it is perceived as the top threat. US CEOs also rank exposure to cyber risk high on their list of concerns.

Our survey has identified technological disruption as a second megatrend with existential implications, along with climate change. Generative AI, in particular, has the potential to alter how companies operate significantly. It is now at a critical juncture and seems poised to transform business models, redefine work processes, and even overhaul entire industries.

The CEOs who participated in this year’s survey seem to believe in both the rapid pace of generative AI adoption and its enormous potential for disruption. For example, around half of the CEOs expect generative AI to enhance their ability to build trust with stakeholders in the next year. In contrast, about 58% expect it to improve product or service quality. Additionally, almost seven in ten respondents anticipate that generative AI will increase competition, drive changes to their business models, and require new skills from their workforce within the next three years.

Experience appears to reinforce these expectations. CEOs who have already adopted generative AI across their company (about one-third of our sample) are significantly more likely than others to anticipate its transformative potential over the next 12 months, as well as over the next three years.

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