Growth of GE due to business growth and not consumers
Posted by Stephen Cline on May 3rd, 2010GE (General Electric) is known for the fact that it is a well diversified conglomerate that caters to companies as well as consumers. Now the company’s CEO Jeff Immelt has said that the recovery of the company in the US will be driven more by business investment and less by consumers. As you may be aware, consumer spending is quite low even now, given the fact that the recession and its after effects are still being felt not only in the US but around the globe, it is no wonder then that there are many who feel that it will be sometime before it is things as usual in corporate entities like GE. Immelt mentioned that its businesses are mending financially, and consumers are anyway quite conservative at the particular debt levels. This is why the US economy has to be driven for some time based on investment rather than consumption.
Consumption is a lag element which is dependent on the recovery of the jobs situation. Unemployment has hovered around the 9.7% mark for sometime which means that a lot of consumers are still in the woods without much hope of buoyed consumption. This is a trend that will not go away very quickly.
I do not see consumer spending making a comeback in 2011. Which is frustrating, but expected coming out of a deep recession.