U.S. Economic Forecasting: GE vs. The Fed - Brief Article

International Economy, The, May, 2001

NAME                  PREDICTION

David Resler          In response to your survey, I would opt to
Chief Economist,      attend the next GE Board meeting. GE is
Nomura Securities     arguably the most diversified corporation in
International, Inc.   the world and its board members include
                      leaders from industries such as food products,
                      paper, and auto parts that are less
                      important to GE's operations. In contrast, the
                      District Bank presidents do not seem to
                      have better data on ALL businesses which can be
                      gleaned from public sources. The exception, of
                      course, is their information on the banks in
                      their district, but that information would be
                      generally less useful to forecasting than the
                      up-to-the minute assessment one could hear
                      at a GE Board meeting.

Susan M. Phillips     The Federal Reserve's twelve regional
Dean, School of       presidents. After listening to their comments
Business & Public     in FOMC meetings, I came to respect the breadth
Management, George    of their knowledge and critical analysis of
Washington            industrial, agricultural, financial and service
University & former   sectors, often coming from conversations with
Federal Reserve       CEO's or sector leaders, and surveys and
Governor.             regional  studies. After such a session, I
                      always felt I had a better understanding of
                      the breadth, depth, and diversity of
                      economic conditions affecting various parts
                      of the country.

Matthew Spiegel       I would pick the Fed officials. Interest
Professor of          rates and the money supply have a lot more
Finance, Yale         to do with the overall economy than nearly
School of             anything else.
Management.

Robert Dederick       Of the two, I'll take the Fed
Executive VP &        presidents--but Alan
Chief Economist,      Greenspan's private thoughts
The Northern          are my real choice.
Trust Company.

Richard N. Cooper     For the near-term future direction of the U.S.
Maurits C. Boas       economy, I would prefer to listen to the
Professor of          private thoughts of the twelve regional
International         Federal Reserve presidents. They sit on
Economics,            the Open Market Committee, and their job,
Harvard               inter alia, is to track developments in
University.           the U.S. economy. They poll their respective
                      regions and draw on competent staffs to form
                      their judgments. General Electric's board
                      meeting, while drawing on much practical
                      experience, would be too parochial, too
                      focused on GE's next strategic acquisitions
                      and dispositions to rely on for an
                      overview of the U.S. economy.

Gary Hufbauer        GE, of course. Both the Fed and GE
Reginald Jones       span the U.S. economy. Both the Fed
Senior Fellow,       and GE have a superstar: respectively,
Institute for        Alan Greenspan and Jack Welch.
International        But GE has far stronger contacts in the
Economics.           global economy, and the experience of
                     its board far exceeds the Fed.

Murray Weidenbaum    I'd go for sitting in on a GE Board meeting,
Chairman, Center     mainly because of the global orientation
for the Study of     of the company and the board.
American Business
& Mallinckrodt
Distinguished
University
Professor,
Washington
University.

Rudolph G.            I'd choose to listen to the Federal Reserve
Penner                presidents. They know what people like
Senior Fellow,        those on the GE board are thinking AND
The Urban             they know what people on the Federal
Institute.            Open Market Committee are thinking.

Mike Englund          I would opt for the Fed officials. The
Chief Market          conduct of monetary policy has a more
Economist,            measurable effect on the U.S. business
Standard &            cycle over the short run than the decisions
Poor's                of an individual firm or industry.
MMS
International.        Over the long run, neither Fed policy makers
                      nor business executives have significant
                      inside information, so their long-run
                      perspectives are of only limited value beyond
                      the publicly known set of opinions of all the
                      world's experts. If I was going to gain value
                      by "listening in," I would want to obtain
                      actionable "inside" information which would
                      likely only be of short-run significance and
                      which, preferably, would be about the
                      near-term course of monetary policy if my
                      interest was in the overall economy.

Stanley F.            My choice would be General Electric.
Druckenmiller
Chairman, Duquesne
Capital Management.