CED’s David Young on the Risks CEOs Are Watching Right Now

Steve Odland: Welcome to C-Suite Perspectives, a signature series by The Conference Board. I'm Steve Odland, CEO of The Conference Board and the host of this podcast series.  

And in today's conversation, we're going to talk about The Conference Board C-Suite Outlook for 2025. We'll be focusing specifically on the results from the perspective of public policy with David Young, the president of the Committee for Economic Development, which is the public policy center of The Conference Board.  

Davey, welcome.  

David Young: Thank you, Steve. Great to be here.  

Steve Odland: Yeah, so CED has been covering all of these kinds of issues, David, since 1942. And of course, The Conference Board has been around for over a hundred years, long time talking about this stuff. But a lot of stuff happening around the world today. And we talked to global CEOs. This was a survey of 1,700 executives. And I think we had, around, what, 500 CEOs around the world. 

Soit's a really, really good survey. We've been doing the survey since, I don't know, 25, 26 years, a long time.  

Fiscal Health Concerns of CEOs 

Steve Odland: So, let's start with fiscal health because that was a big deal for CEOs. In other words, the fiscal health of the United States, what are CEOs saying? It seems to be one of their top-of-mind worries.  

David Young:Yeah, it certainly is. And it's obviously a topic that CED is following and has followed and will continue to follow very, very closely. US CEOs once again ranked the US national debt and deficits first amongst the issues that they expect will have the greatest impact on business and business strategy in 2025. 

Regulation and Corporate Tax Rates 

David Young: Second to this issue was regulation. So, CEOs are obviously deeply concerned about the impact that the debt and deficits have on their ability to access capital, and about the future tax rates and competitiveness, and about the possibility that the US could come to the brink of default if Congress does not address the debt ceiling. Interestingly here, corporate tax rates ranked only fourth on the concerns of US CEOs. The real issue, though, as we see it, is the debt and deficits.  

Steve Odland: Well, wait a minute. Now, why is that the case? It's a little counterintuitive that CEOs would be less concerned about the costs for their own business than the fiscal health of the whole thing. Not that they wouldn't be worried about both, but why would the fiscal health be—does that mean that they think that we're on the brink?  

David Young: No pun intended here by what I'm going to say, but I think physical health trumps the corporate tax rate here. One, they are in some way, shape, or form directly correlated, and I think if the US fiscal health—at the moment, it exceeds $36 trillion, we spend more on servicing that debt than we do on the US defense budget. SoI just think one is of greater concern and has greater consequences than the other.  

It's not that they aren't concerned with the corporate tax rate, they certainly are, but fiscal health over the long term will have greater implications on their businesses, their operations, their strategies, and their investments moving forward. 

Steve Odland:Yeah, you and I have talked about fiscal health many times, but just for our listeners, so what? I mean, we've heard the politicians, previous presidents say debt doesn't matter, so why are they so worried? What could happen?  

David Young: Well, the most important thing would be defaulting on that debt, increasing the cost of capital. 

I think there's another interesting point here. And so if you go back to last year, and you look at the campaign trail, what I find fascinating is it's the number one issue that US CEOs mentioned as a concern, but it didn't feature at all on either of the campaign trails. The other part here is, when you start having conversations with policymakers saying, "Hey, we need to sort out the US fiscal health, which means we have to sort out spending," everyone agrees, but nobody's actually willing to do anything about it because they still want that spending in their own home district. And that will be the conundrum moving forward is, how do you wrestle with this issue that is obviously pertinent and top of mind to CEOs, but nobody'sactually coming to the table with an effective and efficient solution? 

The other part here, just to throw in here, obviously, Trump's department of government efficiencies, DOGE, run by Elon Musk. It did have Ramaswamy in it, as well, but he has now since left to follow his own political ambitions back home. But it will be interesting to see if or to what extent DOGE can help curb government spending. 

Steve Odland: But this is probably why?—this is what CEOs tell us anyway, qualitatively—this is why they're worried, because nobody's focused on it. In fact, all the campaigns of every politician is, I'm going to give you more, give, give, give, spend, spend, spend. And that's what the voters vote for. 

And so therefore, nobody's voting for cuts in services or cuts in some sort of incentive. They all want more for themselves, but they want somebody else to pay for it. And ultimately, it will lead to disastrous consequences for the US economy, the dollar. And that's what they're worried about. OK, they're worried about a bunch of other things, too, as well. One of them being regulation.  

Protectionism and Trade Issues 

David Young: Yep, regulation is there. The other big thing which is obviously top of mind, and it's covered the news waves, let's say, is around protectionism and trade. And this is true beyond just USCEOs. So if you look at USCEOs and global CEOs, highly concerned with protectionism and trade. In addition to regulation, with the new administration coming in, you probably will see a decline or a decrease in regulation. You'll also see many Biden-era rules with regards to regulation being repealed. 

Steve Odland:Yeah, and they like that. They like the less regulation because it?—  

David Young: Streamlines business.  

Steve Odland:Yeah, it got to be a little restrictive there. I mean, we have come out and said, look, you need regulation to level the playing field, provide barriers, but you can't have the cost being excessive to the benefits. Sothey're supportive of that, but it's tariffs that they're worried about, right? Because, these tariffs that have been threatened—not implemented, but the ones that have been threatened would raise the cost of business and essentially raise prices for American consumers. That's what they tell us.  

David Young:Yeah. So this topic, I think it's fascinating because there's obviously been a huge amount of conversation around it from the new administration, the numbers thrown out there. Up to maybe yesterday, 60% on Chinese goods imported to the US. There's obviously this ongoing conversation now with Mexico and Canada. So those three Canada in this order, Canada, Mexico, China—three of the US' biggest trading partners, all in a very precarious position now as the new administration continues to talk about tariffs.  

Steve Odland: But what people need to understand is, when he throws out, OK, we'regonna add tariffs to Mexico and Canada of 25%, what he is really doing is he's starting the negotiations of the USMCA, which is up next year. And he's a real estate developer. I mean, this is the way they operate. They start with an outrageous starting point, and then they settle somewhere in between. So this is his way of negotiating. It's not exactly fun for everybody, but I mean, that's what it is. 

But the tariffs are concerning to people if they actually go through because of the potential impact on inflation.  

David Young: Yes. So just a word on, obviously, his negotiation tactics are very transactional. The one region we didn't mention is the EU, which from the new administration has this trade surplus. And that is disliked from the perspective of the new administration.  

But you're exactly right in terms of, if tariffs come into effect, regardless of the exact percentage, there is this direct correlation to prices being passed on to the consumer, increasing inflation and having some impact on GDP growth. 

I think what's also interesting here, just on this word of tariffs, everyone keeps talking about blanket tariffs, blanket tariffs. I haven't seen too many conversations around "Actually, maybe if they weren't blanket tariffs, but they're actually by industry and/or by product?" And I think that would be more of a realistic way ahead when the new administration is looking at tariffs. So not only is it a negotiation tactic, I think they will get more specific. If they are going to put tariffs on, they could potentially become more specific either by sector and or by product/service.  

Executive Orders and Immigration 

Steve Odland: OK. The other thing that CEOs are worried about—now, we didn't get this in the survey, per se, because the survey was done before the inauguration, but we're hearing from our CEO members that they're really concerned about all of these executive orders. There's been a flurry of them.  

What are you hearing? Which ones are most concerning to people?  

David Young:Yeah. So a dozen executive orders. And I think this is also, I think everyone has to keep in mind, this is Trump's second administration, with a four-year gap between the two.So he certainly has hit the ground running with regards to well, partly staffing, getting people in positions as quickly as possible, but then also leveraging some of the powers of the executive branch to get things moving and to pursue his agenda.  

I think everyone was anticipating executive orders in and around trade and tariffs. That has yet to be seen. I don't think we will anticipate anything with regards to tariffs, according to Trump and the administration, until next month. The other things that he has really pushed ahead immediately, honestly, within the first 48 hours of taking office, executive orders around immigration and regulation, and regulation and energy. So now, declaring an energy emergency.  

And then obviously, really following through on his promise with regards to immigration and shoring up the southern border, which also connects to Trump's conversations and threats, both to Canada and to Mexico around tariffs. And to your point, Steve, leveraging tariffs as a negotiating point to address other critical issues. Not just from a security point of view, but also, he's mentioned drug cartels and the drug epidemic that's happening in the US with regards to fentanyl, and using different levers to address critical issues —not just political or economic consequences in the US, but also areas that have social ramifications in the US.  

Steve Odland:Yeah. So what you have here is the situation where CEOs do think that the southern border needs to be addressed. But they also believe that H1B visas need to be addressed. We only give 85,000 a year, and we need millions of people because of labor shortages and the skill set shortages. Birth rates are down. 10,000 baby boomers retiring every day. So CEOs are really concerned about the quantity of labor, the number of people out there, the skill sets. And so we need the immigration.  

So we get that constantly from CEOs, and we heard that here, too.  

David Young:Yeah, from the conversations we have with CED Trustees and members of The Conference Board, workforce issues are critical. It does vary industry by industry, especially when you look at some of the trustees that we have that work in health care—massively concerned about current and future shortages with regards to the workforce.  

I think it's also important when you hear some of the commentary coming out of the new administration, this is not about—we're not going to stop anyone coming into the US. It is around the legality by which they are here or can enter. And I think the US will remain as it has always been of saying, "Hey, we want the best and the brightest people to be in the US driving economic growth forward, elevating the talent that we have." It's just a matter of how they go about doing that and making sure that people here in the US are here legally and are adding value to society and to economic growth.  

Steve Odland:We're talking with Davey Young about the C-Suite Outlook, what CEOs are saying currently, and their forecast for 2025. We're going to take a short break and be right back.  

Welcome back to C-Suite Perspectives. I'm Steve Odland from The Conference Board and joined today by David Young, the president of the Committee for Economic Development, which is the public policy center of The Conference Board. So Dave, before the break, we were talking about the deficit, regulation, tariffs, all that kind of stuff. 

Geopolitics is also on the mind of CEOs. Talk about that.  

Geopolitical Risks and Global Concerns 

David Young:Yeah, it certainly is on the mind of CEOs. I will say this upfront: I think it is hard to separate domestic issues from global issues. There is this interconnectedness. So we talk about tariffs. We talk about trade takes place in a global ecosystem, a global environment. So, very hard to separate the two, but just a couple of comments on this, and we can get into the numbers.  

When the C-Suite and the CEOs are asked around geopolitical risks, some of the top ones that jumped out from their feedback, trade wars, foreign cyberattacks, conflict in Asia-Pacific, expanding conflict in the Middle East, rising tensions in the Taiwan Strait. So when we start looking at some of the numbers here, I think 42% of global executives put the possibility of trade wars as the geopolitical issue of most concern. Foreign cyberattacks were second, just over 33%. And the potential of a conflict in Asia-Pacific third, at 23%.  

I think there is an interesting result here when we talk to CEOs on the question of the most important economy-related geopolitical concern for executives globally. They ranked—and just remember here, this is executives globally—they rank the impact of higher energy prices first, 38.7%, then decoupling and derisking from China at 23.3%. And there is a contrast here with US executives. In the US, as we spoke about before the break, Steve, in the US, the national debt and deficits was once again first, at 47%. So there is a slight discrepancy between US CEOs and the issues they are concerned about, with regards to global CEOs, CEOs that hold a global role.  

Artificial Intelligence and Digital Transformation 

Steve Odland: Yeah, really interesting. You know another whole area that's been hot in the past couple of years is AI. I think a couple yearsago, CEOs couldn't spell AI. They didn't really know what it was and everything. Now, it is really, it's been an enormous sea change for them. What are we hearing about their concerns or their views on how they're using AI.  

David Young: In a response here, Steve, to a question on the technology focus for the year, US executives ranked accelerating digital transformation, which of course includes artificial intelligence, AI, first. Then, customer experience, and then, product and service innovation. Over half of all US executives report that the productivity of their workforce is the biggest improvement from using AI.  

But there are significant challenges here, as well, which is notably the lack of expertise. And this was ranked first, just over 45%. Following that there was data privacy and security concerns, second at 29.7%. Last year, CED published a Solutions Brief. These are one of our public policy papers recommending the adoption of a series of guardrails for artificial intelligence, focusing on safety, security, and innovation. These guardrails are urgent if the US is to keep the lead in AI.  

A tangent here, as well, which I think is important to note, because we mentioned energy earlier. There is a direct correlation here between artificial intelligence and energy. You're seeing this in the new administration?—a variety of three different companies have come together promising to invest more than $400 billion in the US infrastructure when it comes to building out AI- specific infrastructure data centers.  

And, of course, that relates directly, these data centers have to be powered. They require a tremendous amount of energy. And so there is a direct correlation when you start talking about artificial intelligence and building that out and the US really leading the way in energy. One cannot happen without the other.  

Steve Odland: Well, and production of chips requires a huge amount of energy, as well, in order to drive that industry, and it requires a lot of water. We didn't get into that with the CEOs, but these resources are scarce in some areas, so you really have to be careful how you manage that and the whole thing.  

But energy is important all the way around because, if you want to get to sustainability and a carbon-free environment, you really do need distribution of energy and there's big, big infrastructure investment requirements around that. And CEOs keep saying, look, we need a plan for energy. It can't just be this goal of, we're going to go carbon free. You have to have a concrete plan with investment priorities and get there deliberately rather than just yelling about it. And I think that's what we hear, just, "Come on, let's get organized."  

David Young: Steve, an interesting dimension of that, as well, is you can have the conversation within the US around actually having a plan around energy and the future of energy. But again, that conversation doesn't take place in isolation. It takes place in a global environment. And we look at other countries around the world that potentially have different priorities with regards to energy, whether that's India or China. And so I think that will be one of the biggest challenges around really progressing this conversation, with regards to energy, forward in an efficient and effective manner. 

Energy, Climate, and Sustainability 

Steve Odland: You know, so energy is related to carbon and all that and the climate. So climate and environment was a question we've asked about and that's been really top of mind in the past. Is it still concerning to people?  

David Young:Yeah, it certainly is. When asked about, let's just say ESG-related issues, the ones that most concerned executives, global executives put sustainability first, while the US executives put the impact of climate events first, then sustainability. So a little bit of a flip-flop here. The possibility of ESG litigation ranked last amongst USCEOs, perhaps reflecting changes in the courts and the more deregulatory stance of the new administration. 

When asked what are the two highest environmental priorities for the organization, US executives said climate resilience first, at 31%, then renewable energy and waste economy tied at 26%, and then investment in the energy transition, at 23%. And then after that, you had carbon neutrality at 22%. 

So, yes, this broad area does continue to concern CEOs, and you can kind of slice it and dice it with regards to specific issues. So yes, it still concerns them. It is obviously still very, very important, but it is not nearly as high as some of the topics we discussed before the break: US fiscal health, geopolitical risks, protectionism.  

Steve Odland:Yeah. And that ranking that you just did on it makes perfect sense, cause carbon neutrality is an outcome of actions taken for resilience, and investments in it, and so forth. But that was my point. It's an objective. The objective is to get to carbon neutrality so that you stop impact negatively impacting the climate. But in order to get there, you need this.  

But what does resilience mean? That's one of these buzzwords you hear a lot about. But there is substance behind it.  

David Young: Yeah, it's one of the first times actually, when I've started hearing resilience with regards to climate and the environment—this goes to a topic earlier—in the last few years, especially coming out of COVID resilience typically, more often than not, was referred to supply chains, and you wanted resilience in global supply chains. 

I think here, you want resilience with regards to sustainability and trying to get to that net-neutral endpoint with regards to resilience of the US, of the US economy, of the US society.  

Steve Odland:You've been a CEO, you are a CEO, you're dealing with multiple stakeholders. You're dealing with your customers, your employees, your owners, the environment, the communities, your suppliers. These are all stakeholders, and you can't just satisfy the needs of one and ignore the rest. You have to do it all in balance. This is the most important thing. So when you get to ESG issues, the whole ESG debate is about, "Gee, do we just focus on ESG issues to the detriment of shareholder returns?"  

It's a fight between investors. You've got some investors who go, it's all ESG primary. You've got other investors go, no, it's not "either/or," it's "and"—you need to do that and produce returns. And that's been the big debate here. And the same thing, too, with resilience, it's all about making sure that you can take care of your customers, your employees, and your owners. It's making sure that your supply chain doesn't go down because of energy concerns or geopolitical concerns. Soit's all about making sure that you can continue—it's business continuity, in a way. It's no different than if you've got a facility that is in the path of frequent hurricanes, you've got to harden the facility. 

Well, that's the whole thing. Now it's a global supply chain. And so resilience comes into play on all these dimensions in order to take care of this multi-stakeholder focus.  

David Young: Yeah, Steve, what jumps to mind here is how do you do well and do good at the same time? And your point earlier, I was just thinking about the entire value chain. You've got to look at every step within the value chain. And how do you strengthen every step of a value chain, regardless of the industry, because it is obviously interrelated? But the challenge to your point will be. how do you—at the end of the day, organizations need to be driving profitability. They need to return shareholder value. How do you do that in a responsible manner with regards to the broader environment and impact different organizations and industries have on the broader environment?  

So I think the challenge, and this will remain moving forward, is how do organizations balance both of these areas of driving profitability and private sector growth. , yet adding a positive impact and influence to the environment and ecosystem within which they operate?  

Social Priorities and Final Thought 

Steve Odland:Yeah. And then that takes you to social priorities, and we asked executives about their social priorities. What did they tell us?  

David Young:Yeah. So here again, the results are very interesting. And they do reflect actually longstanding priorities for the Committee for Economic Development and concerns of our CED Trustees. So 49% said economic opportunity is a focus. 42% were focused on education, and 20% on gender equality.  

At the heart of CED's mission is sustaining capitalism. And that can only be done if people know that they have real economic opportunity moving forward, including opportunities for training for the jobs of the future, which obviously, Steve, relate to the topic we had earlier around artificial intelligence and workforce planning, and making sure we are upskilling and educating people for the world that we are kind of moving into. 

Education to ensure that economic opportunity is a critical part of sustaining capitalism and US competitiveness. And so is ending discrimination on race and gender so that all may participate fully and equally. In our capitalist system, including access to capital and in fact, starting new businesses. These issues, plus the importance of ensuring our national fiscal health and open trade with the world and a business environment that promotes innovation. And we hope that this will contribute to continued success for the US economy.  

Steve Odland:So taken all in, wrapping up here, how do our CEOs prioritize what they want from the new administration? What do they think policymakers should do?  

David Young: From a US CEO perspective, we mentioned this at the beginning around fiscal health and addressing this, but I think it is much broader conversation than that. It is around having business leaders and business executives working in partnership with policymakers, both in the new administration and the new Congress, to move forward in a responsible, efficient, and effective manner. 

That means managing their fiscal budgets effectively, being proactive. You know, we didn't talk about, well, we mentioned a little bit around tax moving forward, which will have massive implications, both on people and on corporations.  

But I think there is, and this is where CED has been so focused on making sure there is this working partnership between the business community and elected officials m that we are moving forward. in responsible ways, politically, economically, and socially.  

And I think the other thing here, as well, that just has to be recognized that the US, as I said earlier, doesn't work or operate in isolation. It works and operates in a very complex, dynamic, global ecosystem. The US should continue to play a significant role in that politically but it needs private enterprise to have a partnership, working alongside elected officials to make sure that we promote some of the core values that the US stands for moving forward.  

Steve Odland: Well, sounds like CEOs have a lot on their minds, and there's a lot of work to do here. This is a great study. David, thanks for being with us today and discussing it.  

David Young: Thank you, Steve. Delighted to be here.  

Steve Odland: And thanks to all of you for listening to C-Suite Perspectives. I'm Steve Odland, and this series has been brought to you by The Conference Board.