Pimp Your Finances

We’re inundated with the opinions of so-called experts with their thoughts about the economy, but it’s not often we get to hear from corporate leaders.  On November 14th, Business Week held a CEO summit, hosted by the CEO of private equity firm Castle Harlan.  Here’s what the top minds of some top companies think about the recession.

Fred Smith, FedEx

It’s by far the worst [economy] I’ve seen in the 35 years I’ve been in business…. But I’d be very surprised if anything started to turn around before the middle of next year.

Robert  Nardelli, Chrysler

There’s a lot of second guessing what [treasury secretary] Hank [Paulson] is doing.  Saving [Lehman Brothers] would have provided a little more confidence in the system…. I think it contributed to our 6.5% unemployment rate, which could go 10% plus…. I think we’re going to face challenges of epic proportion.  I hope we’re able to hold it at a recession.

Ralph De La Torre, Caritas Christi health care

Healthcare has been holding its breath…. Projects are being postponed.  All the commodities that health care buys and the companies and people it touches—from imaging to pharma to physicians—are about to dive off the cliff.

Lewis Hay, FPL Group (an energy company)

A lot of people think demand for electricity is inelastic. It’s not. Our customers are cutting back, and they’re not paying their bills, either. Probably 25% of our customers are past due. Normally, it’s more like 15%.

Dennis Dammerman, former vice-chairman of GE

We’ve got to get consumers and business spending again.  For consumers, confidence is key.  And while I don’t agree with much of what Barack Obama wants to do, I think that for a great chunk of our consuming public, he has improved that confidence….

Even if we start growing again, it’s not going to be a full employment kind of growth….  It’ll take until at least 2010 to flush it out of the system.

Timothy Manganello, Borg Warner (engine and power train components)

We’re preparing for nothing good until mid 2010.

Fred Hassan, Schering-Plough (health care)

The key is inflation.  If inflation stays under control and confidence returns, we’ll come back early.  If inflation starts to roar in mid-2009 and thereafter, we have a problem.

My thoughts

While most of the CEOs agree that tough times are ahead, it’s reassuring to know that some see a turnaround as soon as 2010.  If we (as consumers) continue to cut spending, while increasing savings and investment, we’ll be in a strong position to take advantage of the down economy when it finally bounces back.