What CEOs Are Saying: ‘The Consumer Is Under Pressure’
Here is what some of the world’s corporate leaders said this week about the economy, inflation and the labor market, among other topics.
“A few things are increasingly clear. Just as we saw customers accelerate their digital spend during the pandemic, we are now seeing them optimize that spend. Also, organizations are exercising caution given the macroeconomic uncertainty. And the next major wave of computing is being born as we turn the world’s most advanced AI models into a new computing platform.” (Jan. 24)
Tesla Inc. Chief Executive Elon Musk:
“My guess is if there is a—if the recession is a serious one, and I think it probably will be, but I hope it isn’t—that would lead to meaningful decreases in almost all of our input costs. So I would expect to see deflation in our input costs most likely, which would then lead to, yeah, better margins. I’m just guessing here.” (Jan. 25)
International Business Machines Corp. Chief Executive Arvind Krishna:
“What we are seeing is that most of our clients do believe that even if there are some—I’ll call them, minor or different headwinds in 2023—they are going to emerge stronger. As they want to emerge stronger, that means they’re all deploying technology to help offset wage inflation, cyber issues, supply-chain challenges and all the demographic shifts.” (Jan. 25)
Nasdaq Inc. Chief Executive Adena Friedman:
“We have 200 companies on file looking to tap the Nasdaq, and hopefully, if the markets open up as we go through the year. But as you know, it takes two to tango. So, we’ve got the supply. The demand really comes from investors feeling confident underwriting new deals.” (Jan. 25)
Visa Inc. Chief Financial Officer Vasant Prabhu:
“In total spend, it’s remarkable stability. What’s happening is as goods spending slowed down a bit, services spending really took up all the slack. And so, consumers have just shifted their spending, but they’re spending the same amount.” (Jan. 26)
Kimberly-Clark Corp. Chief Executive Michael Hsu:
“I do sense the consumer is under pressure. And we’ve been out talking to our top customers, and so we recognize that the consumer is working through some challenges pocketbook-wise.” (Jan. 25)
Mike Roman.
Photo:
Takaaki Iwabu/Bloomberg News
3M Co. Chief Executive Mike Roman:
“The slower-than-expected growth was due to rapid declines in consumer-facing markets such as consumer electronics and retail—a dynamic that accelerated in December as consumers sharply cut discretionary spending and retailers adjusted inventory levels. … We expect the demand trends that we saw in December to extend through the first half of 2023.” (Jan. 24)
Johnson & Johnson Chief Financial Officer Joseph Wolk:
“We’re assuming a lot of carry-over quite frankly of the inflationary impact that we had in 2022.” (Jan. 24)
Tractor Supply Co. Chief Executive Hal Lawton:
“We believe inflation has peaked, but will remain sticky as we move through the year. It is our view that an orderly loosening of the labor market will be a key determiner of the country’s ability to return our economy to sustainable conditions in the second half and 2024.” (Jan. 26)
Boeing Co. Chief Executive David Calhoun:
“Hiring is not a constraint anymore. People are able to hire the people they need. It’s all about the training and ultimately getting them ready to do the sophisticated work that we demand.” (Jan. 25)
Automatic Data Processing Inc. Chief Executive Maria Black:
“Jobs growth in the U.S. labor market has been slowing, but clearly remains solid which you see reflected in our client base. Despite recent headlines noting job cuts by a number of companies, we have yet to see broad-based softening in the labor market.” (Jan. 25)
American Express Co. Chief Executive Stephen Squeri:
“You’ve seen some headlines of individual companies that are going through layoffs, but the one thing that I would say is I think it’s really important to look at where these companies were prepandemic, and they’re probably still at employment levels that are much higher than what they were prepandemic. And so, there’s a rightsizing.” (Jan. 27)
Lockheed Martin Corp. Chief Executive James Taiclet:
“We’ve been expecting all along in our kind of long range plan that the U.S. government and Congress would step up to meet the reality of the global geopolitical situation, and that’s exactly what played out in the budget process for FY 2023. We also expect that same reality to continue to sadly exist again in the next budget cycle.” (Jan. 24)
Phebe Novakovic.
Photo:
BRIAN SNYDER/REUTERS
General Dynamics Corp. Chief Executive Phebe Novakovic:
“I think the closer you are to the threat, the more urgent you feel your funding requirements. … As we’ve always posited, the threat environment really drives demand for defense products, and we’re seeing some of that now.” (Jan. 25)
Intel Corp. Chief Executive Pat Gelsinger:
“We expect macro weakness to persist at least through the first half of the year, with the possibility of second-half improvements. … To various degrees, all our markets are being impacted by macro uncertainty, rising interest rates, geopolitical tensions in Europe, and Covid impacts in Asia, especially in China.” (Jan. 26)
Chevron Corp. Chief Executive Mike Wirth:
“In terms of the reaction to [the company’s $75 billion buyback], I think it’s perhaps been a touch overblown, given that it’s an open-ended program and we could have sized a smaller one and just been prepared to do another one sooner. … We weren’t trying to create any reaction out there. We’re just trying to indicate the confidence we have in our cash generation.” (Jan. 27)
Quotes were pulled from transcripts provided by FactSet.
Write to George Stahl at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Here is what some of the world’s corporate leaders said this week about the economy, inflation and the labor market, among other topics.
“A few things are increasingly clear. Just as we saw customers accelerate their digital spend during the pandemic, we are now seeing them optimize that spend. Also, organizations are exercising caution given the macroeconomic uncertainty. And the next major wave of computing is being born as we turn the world’s most advanced AI models into a new computing platform.” (Jan. 24)
Tesla Inc. Chief Executive Elon Musk:
“My guess is if there is a—if the recession is a serious one, and I think it probably will be, but I hope it isn’t—that would lead to meaningful decreases in almost all of our input costs. So I would expect to see deflation in our input costs most likely, which would then lead to, yeah, better margins. I’m just guessing here.” (Jan. 25)
International Business Machines Corp. Chief Executive Arvind Krishna:
“What we are seeing is that most of our clients do believe that even if there are some—I’ll call them, minor or different headwinds in 2023—they are going to emerge stronger. As they want to emerge stronger, that means they’re all deploying technology to help offset wage inflation, cyber issues, supply-chain challenges and all the demographic shifts.” (Jan. 25)
Nasdaq Inc. Chief Executive Adena Friedman:
“We have 200 companies on file looking to tap the Nasdaq, and hopefully, if the markets open up as we go through the year. But as you know, it takes two to tango. So, we’ve got the supply. The demand really comes from investors feeling confident underwriting new deals.” (Jan. 25)
Visa Inc. Chief Financial Officer Vasant Prabhu:
“In total spend, it’s remarkable stability. What’s happening is as goods spending slowed down a bit, services spending really took up all the slack. And so, consumers have just shifted their spending, but they’re spending the same amount.” (Jan. 26)
Kimberly-Clark Corp. Chief Executive Michael Hsu:
“I do sense the consumer is under pressure. And we’ve been out talking to our top customers, and so we recognize that the consumer is working through some challenges pocketbook-wise.” (Jan. 25)
Mike Roman.
Photo:
Takaaki Iwabu/Bloomberg News
3M Co. Chief Executive Mike Roman:
“The slower-than-expected growth was due to rapid declines in consumer-facing markets such as consumer electronics and retail—a dynamic that accelerated in December as consumers sharply cut discretionary spending and retailers adjusted inventory levels. … We expect the demand trends that we saw in December to extend through the first half of 2023.” (Jan. 24)
Johnson & Johnson Chief Financial Officer Joseph Wolk:
“We’re assuming a lot of carry-over quite frankly of the inflationary impact that we had in 2022.” (Jan. 24)
Tractor Supply Co. Chief Executive Hal Lawton:
“We believe inflation has peaked, but will remain sticky as we move through the year. It is our view that an orderly loosening of the labor market will be a key determiner of the country’s ability to return our economy to sustainable conditions in the second half and 2024.” (Jan. 26)
Boeing Co. Chief Executive David Calhoun:
“Hiring is not a constraint anymore. People are able to hire the people they need. It’s all about the training and ultimately getting them ready to do the sophisticated work that we demand.” (Jan. 25)
Automatic Data Processing Inc. Chief Executive Maria Black:
“Jobs growth in the U.S. labor market has been slowing, but clearly remains solid which you see reflected in our client base. Despite recent headlines noting job cuts by a number of companies, we have yet to see broad-based softening in the labor market.” (Jan. 25)
American Express Co. Chief Executive Stephen Squeri:
“You’ve seen some headlines of individual companies that are going through layoffs, but the one thing that I would say is I think it’s really important to look at where these companies were prepandemic, and they’re probably still at employment levels that are much higher than what they were prepandemic. And so, there’s a rightsizing.” (Jan. 27)
Lockheed Martin Corp. Chief Executive James Taiclet:
“We’ve been expecting all along in our kind of long range plan that the U.S. government and Congress would step up to meet the reality of the global geopolitical situation, and that’s exactly what played out in the budget process for FY 2023. We also expect that same reality to continue to sadly exist again in the next budget cycle.” (Jan. 24)
Phebe Novakovic.
Photo:
BRIAN SNYDER/REUTERS
General Dynamics Corp. Chief Executive Phebe Novakovic:
“I think the closer you are to the threat, the more urgent you feel your funding requirements. … As we’ve always posited, the threat environment really drives demand for defense products, and we’re seeing some of that now.” (Jan. 25)
Intel Corp. Chief Executive Pat Gelsinger:
“We expect macro weakness to persist at least through the first half of the year, with the possibility of second-half improvements. … To various degrees, all our markets are being impacted by macro uncertainty, rising interest rates, geopolitical tensions in Europe, and Covid impacts in Asia, especially in China.” (Jan. 26)
Chevron Corp. Chief Executive Mike Wirth:
“In terms of the reaction to [the company’s $75 billion buyback], I think it’s perhaps been a touch overblown, given that it’s an open-ended program and we could have sized a smaller one and just been prepared to do another one sooner. … We weren’t trying to create any reaction out there. We’re just trying to indicate the confidence we have in our cash generation.” (Jan. 27)
Quotes were pulled from transcripts provided by FactSet.
Write to George Stahl at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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