Economists aren’t very good at what they do because they deal mostly with theories and assumptions. Businesses are pretty good at what they do because they deal mostly with customers and competition. If you want to know how the economy is doing, ask the business leaders. They know the reality; they have the scoop.
I recently dug through a pile of conference call transcripts to see what CEOs are saying about the state of the economy. Here are 10 excerpts (all from conference calls that took place in the last 90 days).
I think essentially in Europe there is a sentiment there that people are beginning to feel that it is not going to get any worse, that there will be some expansion happening as we move forward and sort of just purely fiscal restraint and monetary restraint. So that feeling is beginning to emerge but I think it is going to be long recovery …
For the rest of the world, whether it’s Africa, the youngest billion, Latin America, Eurasia, our Middle East, we see and of course, Asia, Southeast Asia and other parts of Asia, Indian subcontinent, we see growth, we see very disciplined, monetary policy, balanced budgets, good banking system and the consumer is more positive, and so it’s modeled, and it’s mixed here into United States, we see some signs of improvement.
David Cote, CEO, Honeywell International Inc. (NYSE:HON) :
So for now, we’re cautiously optimistic, but it’s just too early to tell what direction the economy is going … And we’re all concerned that, at some point, this thing turns again and turns in the other direction. We just think the smart thing to do now is to stay conservative and stay prepared. There’s — I see very little downside to being prepared for the downside, and that’s the way you’re just looking at it. And we’re saying, “Okay, better to have this in our pocket to be prepared to deal with that downside.” If it doesn’t happen, well, there is restructuring opportunity, there is let-it-fall-through opportunity, there may be other investments that we’ll do. Right now, just because the news looks a little better the last couple of weeks, but we just don’t think this is a good time to declare economic victory.
David Steiner, CEO, Waste Management, Inc. (NYSE:WM) :
Yeah, I don’t know about you all, but for about two years from 2010, 2012, when I go overseas particularly to China, it was the only place you’d go where you see cranes on the skyline. Over the last year traveling throughout the United States, I’m starting to see cranes on the skyline again, which I think is a positive sign.
Again, we’re not going to call that good times are here again. But I think it’s safe to say that we believe what we’re seeing is some stability and that we will actually continue to see some modest growth.
Prem Watsa, CEO, Fairfax Financial Holdings Limited (USA) (PINK:FRFHF):
And the economy, even last quarter, the United States was flat, or down 0.5%. So in spite of QE3, in spite of QE2, QE1, all of that massive stimulus, monitory stimulus, hasn’t had much of an impact on the economy. And so we’re just thinking that it’s a time to be conservative, but we think what happened in the ’08, ’09, was not like any other economic recession. We mentioned a few times, we think this is a 1 in 50, 1 in a 100-year storm, so you have to be prepared for its after effects. We don’t think it just lasted for 3 and 6 months, and so now we can go forward.
