The U.S. isn't in a 'typical recession': Fmr Home Depot CEO

Bob Nardelli, former CEO of Chrysler and The Home Depot, joins 'Influencers with Andy Serwer' to discuss the state of the U.S. economy.

Video transcript

BOB NARDELLI: I don't think I've ever seen a more challenging time for the CEOs today. I've been through the situation in '07, '08, and '09, where we had the financial meltdown, but we were able to focus on that issue. Today, we have a plethora of issues that a CEO has to try to address. And certainly, recession is one of them.

But we have inflation. We have supply chain, right? We have price increases. The list goes on. I mean, the broad range of constituents that a CEO has to try to satisfy, I've always thought about it, if you try to satisfy everyone like that, you really satisfy no one.

But to your question about a recession, I've said for months now that we are in a recession. We've had nine consecutive months of inflation. And it was a few weeks ago, I was on air, and I said-- we were at 8.6 that time. And I said we're well on our way to 10. And it was the-- the show was a little taken back by that comment. Are you sure 10? I said, yep, 10.

And I think we're well into 10, Andy, and beyond. When you consider shrinkflation and hidden inflation, it is well into 10% or above. And I think it's impacting every individual in our country. And it really puts a tremendous hardship on businesses, big and small, and individual consumers, entrepreneurs, family offices. I don't think there's anyone that isn't being touched by the current environment.

And what's most stressful to me and the CEOs I talked to, Fortune 500, mid cap, small cap, entrepreneurs, is, they really don't see us doing anything positive to try and remediate this situation. And we can pick any subject you'd like to pursue. And I can give you a take on at least what I'm hearing.

And look, I have the benefit of boots on the ground. I mean, and I'm very actively involved in businesses, in advisory, et cetera, et cetera. So I can bring a realistic view. A lot of people are optimistic. Some are pessimistic. I'd like to think of myself as realistic because only then, Andy, can you put in place an appropriate set of initiatives to try and fix it.

ANDY SERWER: Right, a lot to jump off of there. And let's talk about this recession point. Point well taken about inflation. I mean, it is a problem. The Fed's going to be-- has acted, will continue to act, no doubt. But on the other hand, Bob, when you're out there, when you're in the airports, when you're at the resorts, when you're traveling around in the shopping malls, that doesn't feel like a recession now, does it?

BOB NARDELLI: Well, it depends. There's still a demand on the consumer part. So you would say, well, so it's not a typical recession that we're in. But people are still going to travel. When you walk down a grocery aisle and you look at the price on there, you could see almost everything has gone up, right, Andy? Any core food product, what have you, has gone up.

But what's happening now as you look at the price on the aisle, and let's say it's $5, you say, well, it hasn't gone up since last week. But what has happened is about a third less of the volume. Less ounces, less pieces, et cetera. So it's a deceptive correct number, if I can say it that way.

And the same thing on what I'll call hidden inflation. I bet if you solicited your viewing audience and said, send me an example of where you've experienced a personal price increase in a service provided to you at your home, whether it's gardening, whether it's a utilities, whether it's phone service, et cetera, I guarantee you they're going to say they have felt it. So it's not the typical recession that you would think we've experienced before.

Look, I went back 40 years ago, when they're comparing it to that. My mortgage was 18%. I felt it. I mean, it was a real inflation. I think there's still some spent up demands here, where people are traveling, right? To your point, I mean, there's still-- you look at the airlines, and they're inundated with volume. They just have a tough time servicing it because of the employees, because of fuel prices, because of people on the tarmac, baggage handler-- just go down the list.

So it is a very different type of recession. But if you look at some of them like autos right now, used car prices are up. Electric vehicle prices are up 44%. Utilities used to recharge that battery are up 40%. So I don't know people are still saying, well, what about the volume? I mean, take one of the largest beverage companies. They reported a 5% revenue increase, right? So, well, things are good.

Well, then if you ask the second question, which people don't ask, how did you get that? Well, 12% was on price. Price was up 12%. Mix was up, and it wasn't really on pure volume. So we really have to ask the tough second question. Is it price? Is it mix? Or is it volume? And that's where you get to the real truth here about where we are, Andy.