• Paul Knopp is CEO of accounting firm KPMG's operations in the US.
  • He spoke with Insider at the World Economic Forum's gathering in Davos, Switzerland.
  • He told Insider the labor market would likely remain "hot" even with an economic slowdown.  

Even with an increased risk of an impending recession, one top executive says that the labor market will stay hot. 

"Generally speaking, the really hot labor market is something that is going to persist for 3-5 years at least," Paul Knopp, CEO of KPMG's US operations, told Insider on Monday.

"We need more people in manufacturing, we need more people in technology, we need more people in healthcare," Knopp added, saying because enrollment is dropping at universities and the US population is aging, there might not be enough future labor supply as well. 

Knopp spoke with Insider at the World Economic Forum's (WEF) annual gathering in Davos, Switzerland, where world leaders and business people typically gather each year to "build problem-solving communities and initiatives," according to the WEF's website

Manufacturing is indeed experiencing a labor shortage that could only get worse, as is healthcare, per recent research. The US added more jobs than expected in April (428,000 in nonfarm industries). And job openings were at a record high in March, with 1.9 open jobs per unemployed worker, according to the New York Times

But the Federal Reserve's decision to raise interest rates, a stock market slump, and headwinds like inflation and fuel prices have painted a grimmer picture, stoking fears of a downturn. 

Bank of America said Friday there is a 1 in 3 chance of a recession next year but that it will be "milder" than past ones. Companies including Wells Fargo to Carvana are also conducting layoffs.

Knopp said he thinks whether or not a recession will occur depends on how well the Federal Reserve can execute its desired "soft landing," where inflation can fall without hurting employment levels drastically. 

Right now, it's "unclear" if the Fed is going to be able to achieve that, Knopp said, adding that he can get why some might say a downturn has already begun, "because there are so many people in this country that are so dramatically affected by food and fuel costs." 

Companies like Walmart and Target cited those as headwinds in disappointing quarterly earnings last week.

"But in terms of the traditional definition of a recession, we are hopeful we are able to avoid one," Knopp said. 

Knopp also touched on the subject of hybrid work in his interview with Insider, which was fitting given that he took the reins of KPMG US during the remote work era.

He told Insider Monday the flexibility to work from home is positive, but that meeting people in person is also good. 

"We just have to calibrate what the right amount of in-person experience is with remote work," he said. "So what is the workplace now, it's not virtual permanently, but it's changed forever." 

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