Procter & Gamble's chairman and chief executive A.G. Lafley wants the future President of the United States, whomever that may turn out to be, to remember that there is a psychological component to economic performance and that it's important now that Senators John McCain and Barack Obama are running for the nation's top office that they remember to stay positive about the underlying strength of the American economy.
“You know we are in a business where psychology matters - even in the staples business - and in the economy psychology matters," Mr. Lafley told the Financial Times. "It could go negative on the economy, that could be a problem ... We will talk ourselves into a worse recession."
Whoever wins the election will find they are facing unique economic challenges, according to Mr. Lafley. "We have never seen the energy cost and commodity cost scope or scale that we have today. There is not a material that we are buying that is not under inflationary pressure and I honestly haven't seen that before. In the 1970s it was oil and oil derivative materials, now it is agricultural products, it is the full range of minerals and everything is up."
P&G's chief is also hopeful that the candidates will not add to the fear mongering around free trade. "I wish there were a little less rhetoric about the evils of trade and especially international commerce," he said. "I really do believe ... that while there are always winners and losers in any transition, by and large the standard of livings have been improving around the world."
Discussion Questions: How critical is the psychological component to consumer spending? Is a strong retailing environment a by-product of consumer optimism and, conversely, are periods of weak sales created by shopper pessimism?