Former GE CEO Jack Welch was on CNBC this morning, and he made some worrisome comments about the state of the economy.
These excerpts from his interview were provided to us by CNBC:
WELCH ON NOT TAKING OFF:
“SHORT CYCLE BUSINESS ARE BEING IMPACTED BY CREDIT, AND ARE BEING IMPACTED BY GASOLINE PRICES, FOOD, DISTRIBUTION BUSINESSES, CHEMICAL BUSINESS. ON THE OTHER HAND, THE LONGER CYCLE BUSINESSES WHERE COMPANIES HAVE A LOT OF MONEY, NONRESIDENT CONSTRUCTION, MULTIFAMILY HOUSING, THEY’RE PRETTY GOOD. BUT IT’S NOT TAKING OFF. WE’RE SORT OF RELATIVELY STRONG BUT NOT BOOMING.”
WELCH ON BUSINESS:
“THE THING THAT SURPRISED ME WAS THAT THE FOURTH QUARTER TAKEOFF DIDN’T GO INTO THE FIRST QUARTER ON THE SHORT CYCLE PART OF THE BUSINESSES. GASOLINE PRICES, YOU CAN’T HAVE THIS JUMP AND NOT THINK IT AFFECTS THE POCKETBOOK.”
These comments are interesting, and may help people frame their thinking about the economy.
There are crosswinds in the economy right now. Gas prices hurt in the short term, and there are also headwinds from Europe and such. But on the other hand, you have still a lot of room to rebound from the big housing and car crash of 2007-2009.
And there is the key difference between the last time gas prices were this high… then autos and houses were falling. Now there’s a fight between two trends.