Top CEOs on the economy
The CEO of bond investing giant TCW Group, Katie Koch, heard what she wanted to hear at this week's CNBC CEO Council Summit. It wasn't good news, but it matched her view of where the economy is headed. Koch, who described herself as coming into the CEO meeting "in the camp of medium to hard landing," said she'd been surprised at recent events like the Milken Global Conference where she found executives were, in her words, "too happy."
"CEOs are decidedly more negative," she said of the tenure of conversations she had at the CNBC CEO event, "and I think that it's a really, really important data point. ... people are seeing real degradation, revenues being muted and job losses, so that will weigh on the economy."
At the same time, she cited "a major call on global liquidity" which will put additional pressure on the economy and a labor market that is "starting to crack."
That's a view that if not shared exactly note-for-note by CEOs on an economic panel at the CNBC CEO Council Summit, did cover many of the well-known arguments for a downturn that came up in conversation on the stage between CEOs from Wall Street to the steel industry and logistics sector.
While Goldman Sachs ' economic research team continues to believe a soft landing is possible for the economy, and Goldman CEO David Solomon told fellow CEOs "it's hard to have a recession with full employment," he added that his own talks with CEOs reinforce a view that economic conditions are tightening and that does have "leg effects."
On Wednesday, the latest release of Fed minutes showed the central bank's top officials to be split on the next interest rate move, but showing a tilt toward less aggressive policy.
The Goldman CEO is on record as having no specific for-or-against recession call, but he said, "it's hard to tighten economic conditions and have inflation and not have an impact on growth and some rebalancing of impacts."
If there is a recession, Solomon says he is willing to make one prediction: it will be a "shallow" one.
But Solomon, as well as other CEOs, said there is another wildcard factor in the current economy that will make whatever happens next deviate from the economic textbook.
Tamara Lundgren, CEO of Schnitzer Steel , there are two competing forces in the economy that can be seen in the demand for metals. A central bank drive to slow the global economy, on the one hand, but a commodities industry also aligned longer-term with what she described as "two extraordinary industrializing transitions."
One is the transition to a low-carbon economy which requires a tremendous amount of metals and minerals, highlighted by copper for electrification. "We rarely see that juxtaposed with high inflation and tightening credit conditions and a drive by central banks to slow growth," Lundgren said.
The other she cited is the rise of generative AI which will have implications on economic production and worker productivity.
Source: CNBC
