Most economists suck at predicting the economy. They don’t seem to make the best investors or portfolio managers either. I am not sure what value they really add but that is for another post. I suspect no one would really want an economist to run a major company and we wouldn’t really put much credibility to them giving advice to a CEO or coming up with an operational strategy.

So why do we care what every CEO says about the economy or what they think the appropriate monetary policy should be? Enough already! Every company is not a broad proxy for whether we are in or will be in a recession. Every CEO is not an expert on economic data. For example, just because 30% of their revenues comes from international markets does not make them an authority on the economy of those other countries or the relevant currency exchange rates or inflation differentials or standards of living or unemployment / wage rates, etc. etc.

Hearing an executive from GM or Ford say they expect the US will avoid a recession does not impress me. How good are they at building cars and selling them profitably? That’s what I concentrate on. A year ago, was Angelo Mozilo telling you that subprime mortgages would create a crisis? Did I miss his economic forecast? Does Jeff Immelt know more about the global economy than how to increase GE’s stock price for the past 3 years?

I try to totally ignore what CEOs say about the economy. Then again, I do pretty much the same thing with most economists!