Of all the people who have something to say about the BLS, none is more unintentionally ironic than former GE CEO Jack Welch.

I have long stated that Jack welch was one of the luckier, more wildly over-compensated CEOs around. He became CEO of General Electric in 1981, just before an 18 year bull market in big cap stocks began. he left in 2001, just as the market implosion was getting rolling.

GE’s revenues grew 385% under his watch, but the company’s market cap grew 4000%. How did that happen? GE increased earnings over the years, and with stunning regularity, managed a quarterly profit beat.

Indeed, it was too regular: After the 2000 crash, we learned of earnings manipulation and accounting shenanigans. The criticism was GE Capital acted as an opaque leveraged hedge fund that always be counted on to help GE beat by a penny. (GE eventually had to settle accounting fraud charges with the SEC).

So if anyone knows a thing or two about cooking the books, its GE’s Jack Welch. Want even more proof? Have a look at this chart of Welch’s earnings versus his successor, Jeff Immelt:


Hat tip Tom Brakke



That was a nice smooth line under Jack — the sort of line the folks who prepare China’s GDP data aspire to.


Category: Corporate Management, Data Analysis, Earnings, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

58 Responses to “GE’s Jack Welch Knows About Cooking the Books”

  1. Looks like a heart attack !

  2. Molesworth says:

    Another instance of once revered individual descending into a dottering angry old man. Tweeting is dangerous. Welch–known for firing people–and if above example is correct, good at cooking books. He could by happy if he would rest on his laurels and STFU.

  3. VennData says:

    What’s more likely, one slick guy who – desperately wants to be President? Or the entire cast of thousands of PhDs at the Bureau of Labor Statistics?

    Prove what you say Welch. And the next time you dump your wife, give us a lecture on how other rich guys are dumping their wives.

  4. JerryC says:

    “If anyone knows a thing or two about cooking the books, its Jack Welch.”

    If it takes one to know one, then maybe the books were ‘cooked’. There was an adjustment to the household survey which accounted for a large part of the drop below 8%. With the participation rate increase and the upward revisions, this was a pretty good report. Mostly for headlines, though. When is see 200K or better, I’ll more positive.

  5. techy says:

    kind of makes me worried, what if Obama wins…will we have a gridlock for four more years? will the 35% of the right wing crazies just go militant?? democracy is such a bitch…even the fools in large numbers count more than the silent intelligent people grieving over the takeover of their conservative party. I think america is not ready for a black liberal yet, I am ok with mediocracy than a shocking revolution which obama represents.

  6. jnkowens says:

    Perfect response. No hysterics, just facts. For those of us who still think facts actually matter. That’s why I love it here!

  7. VennData says:


    Elizabeth Warren is ahead in the polls…


    If the poster child for Obama’s destruction of American can win against a semi-moderate, then Obama’s coattails will be long. The Tea PArty is in the pocket of their big business creators. They will cut deals to keep the campaign money flowing to them. They will tell everyone that Santorum will “Fix everything” four years hence anyway.

    Also, laughing at the right wing…


  8. James Cameron says:

    Great piece. The only thing more that might be discussed is the possibility that the administration – or any administration – could actually manipulate the employment data.

  9. Molesworth says:

    Obama’s policies are as liberal as those of Nelson Rockefeller and George Romney, both whom used to represent moderate Republicans.

  10. TomOfTheNorth says:

    I was at Kidder when GECC bungled that. I completely agree that Welch is ridiculously overrated. Please Jack, no more business instructionals, no more memoirs, no more Suzy promotionals – just quit speaking in public and go spend your money….

  11. tarheel95 says:

    I had the same thought about Welsh’s hypocrisy when I saw the Bloomberg headline.

    I remember those days back in the 90′s during his reign when GE was untouchable. They wouldn’t even stoop to hold conference calls with analysts to discuss their quarterly “results”. Apparently the nos. spoke for themselves. And good luck getting them to disclose what their organic growth rate was.

    BTW, I worked on BLS’s establishment (payroll) survey as an economist resp. for getting the monthly employment estimates out for certain industries. My time there spanned part of the Reagan-Bush-Clinton terms. The nos. were produced from the ground up (i.e. at the industry level and then aggregated) by civil servants not political appointees. The resulting nos. where what the process produced. There was no mechanism for someone at the top to wave a wand and tell the worker bees to modify the nos. (unlike say a CEO talking to his CFO prior to an earnings release).

  12. DSS10 says:

    GE was, under Welch, notorious for booking revenue on a % complete basis (as was IBM services division then) and taking monster accruals to “smooth the line.” He is the personification of the low testosterone nasty E Level white guy and his screwing the HBR chick really was too much. His credibility is right up there with Greenspan’s. I don’t know why Bloomberg published his comments except to get people disgusted and generate a lot of comments and drive traffic via links like this one.

  13. Biffah Bacon says:

    I would be fascinated to have a broader discussion of what people like Techy above see as “revolutionary” about Obama from a facts and policy based perspective. From actual policy positions it looks like Obama is to the right of Bush in financial, social, and foreign policy with the exception of serving party core constituencies, and even those core constitutencies have to squeal pretty loudly to get some action. Obama certainly looks more conservative than Romney (flippity floppity Romney who likes whatever you like for the moment) save for his unfortunate skin condition.

  14. donna says:

    My reply to Mr. Welch:

    @jack_welch “Job numbers cooked” says the man who fired 100,000 people at G.E….

  15. A says:

    As his former wife would tell you, when you start thinking with your hips, instead of your head, you should keep your mouth closed.

  16. Barry,
    Thank goodness someone remembers the Welch “beat by a penny every quarter” charade. Thanks.

  17. PDS says:

    So BR…..you conclude that Jack Welch is an expert at “cooking the books”…so extending the logic to his comments today re the employment report…that means he must be correct…that they were cooked…because he’s an expert at doing it…he must be an expert at spotting it!!!…Correct? :)

  18. Moss says:

    Perfect working example of a partisan.

  19. techy says:

    Biffah Bacon :

    His ideas or policies are anything but revolutionary. The biggest revolutionary thing about him which half of the country detests is: 1. Liberal supporting gay marriage[religious people think three things are most sacred worth a war] 2. His skin condition[deep south is still bitter about the civil war and everything around here gets blamed on the colorful people]

  20. techy says:

    Just wanted to add some more:
    IMO this country is not yet ready for a color person to lead particularly if that person is a liberal candidate.

    around 75% of people here are christians and I am guessing that maybe half of that go to church weekly hence they beleive in all the propaganada dished out. So a liberal person will have hard time getting more than 60% of support no matter how good he is.
    On top of that majority of people in the southern states think that black people are inferior.
    How can you govern a country if you only have 55% support of the people. I mean 70 house members can completely paralyse the legislative process.
    Hence I believe that we need a moderate republican and hopefully romney has a good heart, even though I dont know what he truly stands for.

  21. BennyProfane says:

    Another example of the bitter 1% rich white guy syndrome. You would think he would be more grateful that Obama helped bail out his former company and give the present CEO a desk in the White House.

    That’s OK though. Just as Romney has turned an unwelcome high power light on the PE industry, now Welch has woken up those who know better about his “genius” as a corporate titan.


    About those August non-farm payrolls revisions:

    There seems to be an even simpler explanation to the revision of the August non-farm payroll data released by the Bureau of Labor Statistics — at least according to Andrew Zatlin, founder of SouthBay Research. According to Zatlin, from 1994-2012, August was revised upward in every year the economy showed growth. The only exception was in 2004 when there was a slight downward revision. In the years the economy was in a recession — 2001, 2002, 2007, 2008, 2009 — the average revision was actually down to the tune of 95,000 jobs. About the only thing one can really tell, it seems from the August employment data and the subsequent revision, is that the U.S. economy in 2012 is in a growth period. Whether or not that trend will continue through to next year is unclear, but one can at least take heart in that the August 2013 revision will give us a hint.

    (Vincent Cignarella is a currency strategist/columnist for DJ FX Trader and co-inventor of The Wall Street Journal Dollar Index

  23. [...] Update 3:44PM: Why you should read Barry Ritholtz:  [...]

  24. patrick cullinan says:

    Concise and on the money, Barry. I am 62 and I ain’t (sic) tweetin’. 76? hmmm.

    Dear Jack…can you hear me Jack?

    Well, he wasn’t senile when he was cooking the books. He needs his young sidekick to remove the keyboard and, and, slowly walk away. It’s a damn shame nobody wants to walk into the sunset any longer.


  25. MikeNY says:

    Welch is an embarrassment — most of all, to himself.

    He was on CNBC last week, and he made that buffoon Joe Kernan look like Isaiah Berlin.

    Welch really needs to STFU and stick to the tiddlywinks.

  26. RC says:

    I have long stated that Jack welch was one of the luckier, more wildly over-compensated CEOs around

    Ofcourse Jack Welch was a bureaucrat and BR’s data shows that a crooked one too. I hate it when people call glorified bureaucrat who run companies where none of their own capital is at risk, great businessman. What is this “business” where there is no downside (or only downside is that you have to get another job), no risk?? It would be like Catholicism without hell.

    The GE bureaucrat factory generated many “leaders” who ruined many good companies. Nortel was ruined by an ex GE bureaucrat Mike Zafarowski. Bob Nardelli at Home Depot … There are many other examples.
    Beware of these “leaders” and “businessmen”…

  27. [...] to take emanate with a government’s jobs numbers. Barry Ritholtz (@ritholtz) has an inspired rant on this over on his blog, The Big [...]

  28. ben22 says:

    He’ll be CNBC within two weeks now and Kernen will be beside himself with joy

    My father in law told me he did business with Welch in the late 80′s.

    he told me that he was, beyond a shadow of doubt, the biggest asshole he ever came across in his entire career, which I found very easy to believe

  29. ben22 says:

    btw, BR


    “That was a nice smooth line under Jack — the sort of line the folks who prepare China’s GDP data aspire to.”

    was hilarious

  30. drewburn says:

    Welsh is senile AND cooked the books big time. And it wasn’t just the “smoothining,” he downplayed the fact that the vast majority of his profits came from the financial unit. Loved the analogy to the Chinese GDP data, BR!!! Snark, snark.

  31. VennData says:


    Welch angrily says that “They’ve been accusing Romney of lying for 48 hours.”

    That’s his argument/ What a scum ball. Let’s see in a few months if if takes it back as the employment picture continues on its slow improvement. I bet he doesn’t.

    Boy he wants his tax cut real bad, doesn’t he?

    And who they heck follows Jack Welch on Twitter?

  32. Iamthe50percent says:

    your last post is a parody, right?

  33. theexpertisin says:

    Maybe Welch should just shut up and gracefully cast his one vote in obscurity. Old tycoons need to know their limitations.

    Are you reading this, Soros?

  34. philipat says:

    At least under Welch the line was moving upwards. Immelt is obviously more focused on politics and taxes.

  35. jolietjim says:


  36. manifest says:

    I still think the story behind the story is Tom Brakke’s graph and the lineage of teachers responsible for nurturing Immelt’s note-taking skills. =)

  37. jeffers5 says:

    Given his track record, the inane tweet from Welch is not surprising. What is more troubling, is that I think he really believes the crap he says. How does someone get to that place?

  38. Bob A says:

    I don’t care how successful he ever was. He’s a despicable little troll.

  39. orvil tootenbacher says:

    oh that’s jack welsh. thanks for clearing settling a bet for me… but i am still suspicious that actually may be that abe simpson.

  40. RobPublicAgain says:

    Next will be “GET OFF MY LAWN”

    or another geezer favorite


    ps – love the chart – it’s perfect

  41. [...] Jack Welch fanned the flames of conspiracy theorists. [...]

  42. CNN Money says:

    [...] It really is quite astonishing that Welch decided to take issue with the government’s jobs numbers. [...]

  43. wkevinw says:

    1. Thanks for the chart. It speaks for itself
    2. BR is being kind. The ethical rot that was exposed when he resigned is deep and wide. There were resignations at leading publications due to conflict of interest he caused. I am sure all that has since been taken down from the www. At one point you could search and find out lots of crazy stuff that he did.

    He now gives seminars for big corporate clients on ethics.

  44. [...] BLS truther controversy was, in a word, sad. That folks now nonchalantly float claims that government agencies fudge [...]

  45. arbitrot says:

    And then there is the fact that Welch, Romney, et al weren’t complaining about the BLS’s unemployment number when it was over 8%. As a matter of fact, true patriots that they are, they positively celebrated any number over 8% and based their campaign around it.

    Gee, live by the BLS die by the BLS.

  46. [...] Mr. Welch — under whose leadership G.E. reported remarkably smooth earnings growth, with none of the short-term fluctuations you might have expected (fluctuations that reappeared under his successor) — doesn’t [...]

  47. [...] maybe Mr. Welch — under whose leadership G.E. reported remarkably smooth earnings growth, with none of the short-term fluctuations you might have expected (fluctuations that reappeared under his successor) — doesn’t know how hard it would be to cook [...]

  48. [...] maybe Mr. Welch — under whose leadership G.E. reported remarkably smooth earnings growth, with none of the short-term fluctuations you might have expected (fluctuations that reappeared under his successor) — doesn’t know how hard it would be to cook [...]

  49. [...] Jack Welch knows a thing or two about cooking the books (TBP) [...]

  50. [...] to find the numbers! Most of the links just went back to 2011, or to 2008. Eventually I came across this blog by Barry Ritholtz that links to a news article from 2002 (shortly after Welch stepped down from [...]

  51. jrivkin says:

    Here was a better tweet for @Jack_Welch from @Jack_Rivkin: “Unbelievable earnings report..Those CEOs will do anything..Can’t manage, so change numbers.”

  52. [...] The September Nonfarm Payrolls last Friday stirred up heated debate as some commentators, presumably largely Democrats, cheered the results. Others, with Republican tendencies, complained that the numbers being touted were aberrations, manipulated, strong evidence of the big conspiracy to reelect Barack Obama.  Accusations started flying, with Jack Welch leading the way, tweeting ”‘Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers.’” (Mish)  Ironically, Jack Welch, former GE CEO, might know a thing or two about cooking books. [...]

  53. [...] (e) However, other people are not constrained by that. See the Barry Ritholtz piece, GE’s Jack Welch Knows About Cooking The Books. [...]

  54. socalgail says:

    Thank you Barry for this enlightening bit of gossip! We now see that Jack Welch is a brilliant caricature of himself, a criminal and a liar, squealing about the fact that the Republicans whose votes he bought, and who fought valiantly to throw the rest of us under the bus, have not quite succeeded in their dastardly endeavor.

    Sadly, “techy” has lots of company here in San Diego. While campaigning door to door for a Democrat running for Congress, I was told by a self-professed libertarian currently benefiting from SS and Medicare that President Obama is a communist and that he wants to take away all our “freedoms.” I asked her if she realized that the Republicans, whose propaganda have her enthralled, consider her a lazy taker. Apparently, she only considers government programs communistic if they benefit people who are not her. The oligarchy seem to doubt they could conduct a successful military coup here. But they have demonstrated an amazing ability to scapegoat racial minorities for causing the problems of poor whites. The number of well off people who now consider themselves victims is astonishing. A commander of a local Navy wing stationed in Coronado was delighted that 40 Republican Senators blocked a jobs bill for returning vets. He explained that the bill also extended benefits to new enlistees, thereby worsening the deficit. Without the legislation, he still retains his benefits! The evangelicals who now make up the base of the modern Republican party, and whose grasp of reality is marginal at best, have been well trained to question any and all data. This benefits the Israeli and big oil lobbies, among others.

  55. [...] I know that’s way over the 140-word character limit for Twitter, but that would have been an honest and thoughtful way of talking. What Welch has done in tweeting his partisan accusation of fraud – and then concocting entirely different reasons for why he questioned the numbers – is bring shame upon himself and everything associated with him. [...]

  56. [...] to Barry Ritholtz for his masterful takedown in the wake of Welch’s baseless charge that the Obama administration “cooked the [...]

  57. john lux says:

    Let me see the logic here, jack welch is good at controlling earnings, therefore the jobs number is accurate.

    Or Jack welch is a bad guy, therefore the number is accurate?

    Does this strike you as being off the wall logic?

    The issue is not whether jack welch is a good guy, the issue is whether the number is accurate, yes?

    Given that nobody in their right mind thought it would be better than 8.1, given that there is no other such great improvement in any other data, given that it is the largest change in 29 years, you not starting to see that something is wrong with this number here? Guess there is no way you can do an real statistical analysis on the merits, right?


    BR: BLS Unemployment data is a statistically noisy series, not measured like NFP (Establishment survey) but rather asked through random interviews, is known forsome big swings — and September, with people returning from summer vacations and idle auto factories being brought back on line to make the new model year cars, is noisier than most months.

    Hows that?

  58. [...] I see that the excellent financial blogger Barry Ritholtz also observed that “if anyone knows a thing or two about cooking the books,” and he did so with an [...]