Last month, the head of the world’s largest advertising firm spooked investors when he spoke of “uncertainty” in its business in the U.S. and Europe. This stoked fears of a double dip recession because advertising is one of the first things companies cut when they sense trouble on the horizon. Sorrell, though, is singing a different tune this month.
Speaking to Bloomberg Television, Sorrell said, “Things look significantly better than anticipated. In August we saw continued sequential growth.”
Why this happened is not immediately clear. Maybe WPP won some business that it did not expect. Still, the turnaround in Sorrell’s sentiment was remarkable in such a short time frame given that the overall economic outlook remains as gloomy as ever. There are bigger issues at play here.
In this 24-hour news cycle, newsmakers are expected to speak with certainty about an economic downturn the likes of which has not been seen since the Great Depression. Forecasting can be a fool’s errand given how unpredictable the economy and stock market have behaved. The trouble is that the media and investors punish executives for saying that they are unsure about something.
In the end, people wind up in Sorrell’s situation: Talking a lot but not saying anything.
–Jonathan Berr
After this post, appeared Sorrell emailed me the following statement:
We’re only trying to reflect the contradiction between current market (not real world) uncertainty and actual corporate results.
In the rear view mirror, things are not bad – looking forward there’s significant uncertainty – and we said we don’t think there’ll be a double dip.
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