Conventional Indicators Not Painting a Clear Picture of the Economy, Says AT&T CEO

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Apparently even leaders of the nation's largest businesses don't know which way the economy is heading.

In a recent interview with Bloomberg Business Week, AT&T CEO Randall Stephenson acknowledged that conventional methods of assessing the strength of the U.S. economy are no longer reliable, especially in a market with such varied spending patterns in both the consumer and business sectors.

On the high-end side, consumers and businesses are spending money and upgrading their phones at an increasing pace, according to Stephenson. But he also identified a bifurcated society with an equal number of have-nots, who are unable to invest their resources back into the economy.

Further clouding the picture is that fact that two traditional economic indicators – home construction and the creation of new businesses – seem to be trending in opposite directions. While the construction of new homes is on the rise, new business startups continue to decline, Stephenson told Bloomberg.

"I've never seen it like this," Stephenson said. "Small business starts are still negative. That used to be the early warning indicator. When you saw small business starts turn positive, that was a great sign."

Larger corporations are increasing their telecom spending, Stephenson says, but those investments are more related to upgrades than expansion.

"Hiring and putting people on payroll – that's when our business catches leverage and starts to take off," Stephenson told Bloomberg. "We're still not seeing that."

AT&T's chief executive made headlines earlier this month when he admitted – for the first time – that the carrier made a mistake by introducing an unlimited data plan several years ago, even though it helped attract a fair number of subscribers, according to the New York Times.

Speaking at the Milken Institute’s Global Conference, Stephenson called the all-you-can-eat data plan his "only regret," noting that the company needs to continually invest capital to account for users that chew up bandwidth at a flat fee.




Edited by Braden Becker
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