FedEx chairman gives economists lesson in economics
Economists have not taken advantage of supply chain tracking tools to improve their forecasts, which are frequently predicated on monthly economic indicators of productivity, Frederick Smith, president and chairman of FedEx Corp., said Thursday.
The U.S. economy is still growing at a solid pace despite a temporary slowdown during March, he said.
Speaking at the Bear Stearns investor conference on the global transportation industry in New York, Smith said that macroeconomists often overreact to small blips in economic activity because they don't understand that the in-transit tracking and warehouse management systems in use today give corporate executives the ability to quickly adjust production and inventory levels to meet rising or falling demand, rather than relying on lagging economic data for their business decisions.
'Most recessions are simply inventory corrections' and not a sign of fundamental economic problems, Smith noted. 'People see one or two numbers and extrapolate into broader trends that may have been true several years ago, but today businesses instantly correct, lower their inventory, make some adjustments, and the economy remains overall strong.'
The minute demand increases, companies restock and order more inventory, he added.