Economists growing more optimistic, CEOs pessimistic

11 10 2007

Economists growing more optimistic, CEOs pessimistic

Posted by: in Stocks Money News

Filed under: Forecasts, Economic data, Housing, Federal Reserve

Economists and CEOs have vastly different views on the economy.

A Wall Street Journal (registration required) poll of economists surveyed between Oct. 5 and Oct. 9 showed that on average they put the chance of a recession at 34%, down from 37% in September.

Is it a big deal that economists are 3% more optimistic than they used to be? Well, that depends. Though the dismal scientists expect the federal funds rate to be reduced one more time this year by one-quarter percentage point, they are pretty downbeat on the housing market.

Many, though, apparently see the glass as half full.

“Some of the uncertainties have faded, partly due to the fact that the Fed moved more aggressively,” Lou Crandall, chief economist at Wrightson ICAP, told the Journal. “The Fed’s willingness to pull out all the stops played a role in bolstering the economy.”

Now contrast that with the views of CEOs, such as Merrill Lynch (NYSE: MER)’s Stan O’Neill, who according to Reuters said in the preface to a poll by the Business Council and Conference Board that, “Results … show markedly more pessimism about current U.S. business conditions, compared to other parts of the world.”

In fact, 44.3% of the 61 top CEOs expect economic conditions in their industries to get worse, up from 24.4% in February. Almost 60% of those surveyed expect the U.S. economy to get worse, up from 24.4% a year earlier.

So who are you going to believe?

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