A few of us just had lunch with the CEO of Eaton Corp., Alexander “Sandy” M. Cutler, and got a glimpse of how at least one corporate chieftain views the economy and government policy-making. As corporate executives go, Cutler’s fairly outspoken: U.S. government debt is waaaay too high and we have to do something about it “sooner than later.” That means raising interest rates to attract capital while also making sure the Congress and president don’t pass too many deficit-expanding policies, he argues. Cutler’s not against some of these programs per se but the timing is wrong, he maintains.
The rest of the world, anxious about our debt load, needs clear signals, soon, that the U.S. has a grip on its finances, he says. Today’s news that third-quarter gross domestic product rose 3.5% is pleasing, of course. But Cutler sees enough stumbling blocks to forecast a 10%-plus unemployment rate lasting through 2010 and effectively hampering much in the way of economic growth.
Companies, including Eaton, won’t jump to re-hire laid-off workers for more than a year; they’re too cautious, having endured a shocking economic downturn, and will prioritize generating improving profits even if it means maintaining low inventories as demand picks up, Cutler believes. Continue reading…
