No one can accuse News Corp. CEO Rupert Murdoch of being an economic cheerleader, despite his net worth of $4 billion according to Forbes magazine.
In an interview with Fox News Channel and Fox Business Network anchor Neil Cavuto on April 2, Murdoch was not hopeful the financial markets would recover their value within the next 12 months.
“Look, I’m not a market expert,” Murdoch said. “I would say this is a bear market rally still. We’re not going back to the old levels in any hurry at all. That’s two or three years away.”
The News Corp chief executive (NASDAQ:NWS) had the same view of the overall economy.
“I think the same,” Murdoch replied. “Maybe end of next year – we’ll see. I hope.”
Murdoch illustrated his point by reflecting on the rapid decline of commercial real estate in New York City.
“I walk around the streets of New York, all I see are ‘to let’ signs out, everywhere.” Murdoch explained. “Some extra space we needed and let on Sixth Avenue three months ago at 80 bucks a foot is now available at $60 in that building, so you know things are still on the way down.”
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He told Cavuto the economic situation was dangerous because of the psychological effect the downturn would have on the consumer in a consumer-based economy – which people would be more likely to save than spend, which would have a detrimental effect on the overall recovery.
“I think the long-term situation is still very dangerous,” Murdoch said at the National Cable & Telecommunications Association’s Cable Show in Washington, D.C. “And, I don’t think anyone has the answer – whether we’re coming out this year, next year or in five years time. But, I’m slightly pessimistic because I think that everybody, every family, rich and poor, are poorer than they were a year ago. And, they’re just going to be thrifty and try and restore their position and we’re going from a minus-two percent to a plus-four-or-five [percent] savings rate, so you’re going to have lower consumption and it’s just going to take time. I think we’re going to work our way through it.”
The components that threaten the recovery are inflation and protectionism, both a direct result of what the government has done or will do. One pertained to the inflationary result of the government’s effort to “stimulate” the economy. The other is how the U.S. Congress would react to a rise of unemployment and the potential of a protectionist response.
“The danger is that they throw so much money at it – the government, to try and get out of it quickly, that we’ll end up with inflation and everyone on fixed income is going to be hurt,” Murdoch said. “And, I just don’t see how we can borrow enough money to meet these deficits that they’re talking about. We’ll have to print and that just gives me an awkward feeling. And as the unemployment rises, how are you going to stop this Congress from being protectionist?”
Murdoch’s media empire includes tabloid newspapers, Fox film studio and broadcast network, a controlling stake in Dow Jones (parent of The Wall Street Journal), the Fox Broadcast Network, Fox News Channel and the upstart Fox Business Network.