Economic Outlook: Looking at trends

By ANTHONY HALL, United Press International  |  April 9, 2012 at 10:20 AM
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As corporate reporting season kicks off this week, the pundits will be out in force generalizing with gusto.

It will be in the investors' interest to find out which companies fit the template of a Survivor Island success story and which do not.

In general, however, U.S. stock markets are at their highest levels in four years and the lessons of the Great Recession were not lost on everybody. Quite a few chief executive officers and quite a few of their teammates did well, owing to a few formulas dictated by pure fear.

Fear will do wonders for rearranging the corporate landscape. The most often-told story after any recession is that the workforce needs to be retooled to catch up to modern times. As regrettable as it may be to lose millions of jobs, there is a lesson to be learned by a corporation that lays off 4,000 workers and still survives. That adaptation was painful, cold, cruel and indifferent.

Corporations, The Wall Street Journal said Monday, are now leaner, more nimble, more productive. In 2007, for example, companies surveyed by the Journal generated revenues of $378,000 per worker. In 2011, that rose to $420,000 per worker.

Corporations are not going away -- but, broadly speaking, they are going in two different directions. They are going digital or they are going overseas.

What did away with a national retail bookstore chain during the recession did not wipe out curiosity. It just knocked out paper and huge box-stores with big heating, air conditioning and labor bills. The genius of Netflix, when it started, was that, ballpark guess, 90 percent of its rental bills, energy bills and workforce would be paid by U.S. taxpayers. They are called postal workers.

This upcoming corporate reporting season is likely to continue recent trends: Businesses are still increasing capital spending and investing more overseas.

It is easy to be cynical about Watson Pharmaceuticals Inc., for example, a generic-drug maker that is now producing far more product than it did before the recession, partly by moving half of its production to India. The Journal reports that this was done, among other reasons, to be closer to "non-U.S. customers." But guess what? Fiat was thinking along the same lines and one of the places it was thinking of moving to was the United States, given that U.S. auto sales are on the rise, while Europe looks headed for a second recession.

What companies cannot go digital? McDonald's will never make a digital hamburger and Starbucks will never make a digital cup of coffee. You can't make a digital can of paint or a digital raincoat. Look for these companies to expand their menus or their job descriptions to include Chinese.

Large U.S. companies are not turning their attitude on hiring around. But it is sure getting trendy around here.

In international markets Monday, the Nikkei 225 index in Japan shed 1.47 percent and the Shanghai composite index in China lost 0.9 percent. The Hang Seng index in Hong Kong fell 0.95 percent and the Sensex in India dropped 1.51 percent.

The S&P/ASX 200 in Australia shed 0.33 percent.

In midday trading in Europe, the FTSE 100 index in Britain rose 0.35 percent while the DAX 30 in Germany was nearly flat, off 0.13 percent. The CAC 40 in France gained 0.19 percent and the Stoxx Europe 600 added 0.12 percent.

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