Top CEOs Predict Economic Recovery in Mid 2010
Business Week Editor and Chief John Byrne recently interviewed a panel of business leaders and were predominantly pessimistic about a recovery any time soon. With nothing but bad news for months, it is clear that the economy is really bad, but it is unclear how bad it will get before it turns around.
“This is by far the worst I’ve seen in the 35 years I’ve been in business. It’s just gone right off the cliff. For retailers, I don’t think there’s going to be any Christmas to speak of. Some of our high-end retailers reported sales down 25%” said Fred Smith, CEO of FedEx.
“We’re preparing for nothing good until mid -2010. If things get uglier, it’s possible it won’t improve by then.” said Timothy Manganello, CEO of BorgWarner.
“Even if we start growing again, it’s not going to be a full-employment kind of growth. We’ll still see the misery index climb. It’ll take at least until 2010 to flush it out of the system” said Dennis Dammerman, the former vice-chairman, GE.
“We could certainly ask if Lehman really had to go down. It’s a tragedy to have let that company go. Saving it would have provided a little more confidence in the system. Its loss seemed to add to the anxiety on Wall Street- and moved it to Main Street. I think it contributed to our 6.5% unemployment rate, which could go to 10% plus.” says Robert Nardelli of Chrysler.
If their predictions are right we could be in for a long 2009. In the weekly Business Week cover story podcast, they pointed out that the job losses are feeding on each other. When people lose their jobs they stop spending, so the people who sell to them lose their jobs. Interestingly, they also point out that the unemployment rate is usually understated and it could be much higher. Black teenagers are already at over 30% unemployment and some economists predict this could go to 70%. Some of the most pessimistic economists are predicting as high as 5 million job losses by the time the economy hits bottom.
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