The quarterly corporate masturbatory exercise that is the NABE Executive Survey continues unimpeded by its historically poor forecasting track record.
Note that these execs are not trying to predict the economy or the market or inflation or growth: They actually do a poor job predicting their own behavior.
Here’s this quarter’s ravings:
“The NABE respondents see continued solid growth in the economy,” said Gene Huang, Chief Economist, FedEx Corporation. “In the second quarter, demand and profit margins are both stable and strong by historical standards. Hiring plans continue to improve. The growth of capital spending remains brisk with the expectation of further expansion ahead. There are continued signs of inflation, with a pickup in wage and salary growth and a rise in material costs and prices charged to customers. NABE panelists indicate that long-term interest rates are not likely to rise very high, that housing prices are likely to rise over the next year, and that the dollar is likely to remain stable. A large majority of the respondents expect oil prices to average between $30 per barrel and $60 per barrel for 2006. Major shocks to the economy are most likely to come from a sharp rise in interest rates, an oil price spike, a terrorism event, a hedge fund blow-up, or a hard landing in China.”
I must hasten to add that the executives’ track record — on Growth, Inflation, Hiring and Capex makes the Dismal Scientists prognostications look good in comparison.
Bottom line: Relying on these surveys hallucinogenic expectations of increased hiring and CapEx have been disappointing to investors.
Moral: Watch what they do, not what they say.
UPDATE JULY 18, 2005 11:45 am:
Rex Nutting points out that this is a survey conducted by corporate economists, and not the similar NABE executive survey. I stand corrected.
Steady Demand Growth with Inflation Pressures Evident
National Association for Business Economics
Mon, July 18, 2005
U.S. businesses see more pricing pressure, hiring
July 18 (Reuters) http://today.reuters.com/investing/financeArticle.aspx
US businesses see inflation
pressures in Q2, H2 GDP up annual 3-4 pct – NABE
AFX News Limited, 07.18.2005, 03:07 AM