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GE Forecasts Double Digit Growth in '06 after Record '05
Old 12-17-2005, 09:17 AM   #1
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GE Forecasts Double Digit Growth in '06 after Record '05

With so much negativity on the board as of late, I thought I'd point out some of the many things that are still going right.* Several recent posts have focused on the well known problems the auto manufactures are having and then want to extrapolate those problems as a proxy for the rest of the economy.* Why not focus on companies like GE and extrapolate their success!

General Electric Co. reaffirmed its forecast for a double-digit profit increase next year, saying the company is using its huge size to bolster growth around the world.* “The GE portfolio is set up to generate cash and lots of it,” GE Chairman and Chief Executive Jeff Immelt said during a conference call with analysts.* *Immelt said GE is using its huge size to its advantage, creating fast growth in countries such as China and India. The company’s size enabled it to continue making investments in aircraft engines during tough times, he noted.
Not only are old world companies like GE still doing well, so are the very new world companies.* Take Google, for example.* Regardless of what you think of the company's stock, after incorporating just 7 years ago they are now earning over $1 billion per year in income and generated $1.8B in cash flow from operations (real cash) over the past 9 months.* From next to nothing a decade ago, they now employ over 4,200 workers and are still hiring.

In other good news:
1) Annualized GDP growth has exceeded 3% for the past 10 quarters.* This is the second longest string of consecutive 3%+ quarters since before 1930 and is second only to the 13 quarters that ended on 3/31/1986.*
2) S&P 500 earnings have grown at strong double digit rates for 4 consecutive years, and is forecast to increase another 11% next year.
3) Productivity (the driver of improved living standards) has been on a sharp upward trend and is within striking distance of the highest average level in the past 50 years – and perhaps longer as I only have data going back to 1950.
4) Excluding a few years in the late 90's, unemployment is at its lowest level in 30 years
5) Inflation was down 0.8% in November on declining energy prices.* While the 3.6% annual rate is still higher than recent history it is not out of line with long-run historic averages.*

Cheer up folks.* *
Retired early, traveling perpetually.
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