There are few companies that have benefited from the worldwide expansion of capitalism more than Caterpillar Inc. (CAT). The maker of giant earth movers, among many other things, has been at the forefront of the construction world for decades. And China’s dive into modernization these last 20 or 30 years has helped Caterpillar become one the major brands in the world. So, unlike the endless number of analysts paraded in front of the CNBC cameras on a daily basis, CAT’s views come from the real world of business. And they are not currently painting a rosy picture. In fact the gloom in its forecast is so pervasive that you might be forgiven for mistaking it for one of those perpetually pessimistic gold bugs:
The Peoria, Ill.-based maker of diesel engines and iconic yellow bulldozers, pipelayers, backhoes and other pieces of heavy equipment said Wednesday it expects the global economy to grow by just a little more than 2% in 2013, slowing slightly from a pace of around 3% in 2012. Cat’s global footprint, and exposure to China, give the Dow industrials component credibility as a global economic bellwether.
Now, it’s only fair to note that this prediction (and others) comes at the same time that they reported a very disappointing quarter. Many a company has gone searching for reasons/excuses that could plausibly be utilized to explain a bad performance, so it does behoove one to be careful. Still, if there is any company worth listening to when it comes to the global economy, CAT would have to at or near the top of the list.
Having said all that, other than hard-earned experience, I am not sure that CAT is employing any real economic acumen when it come to policy suggestions. In fact, here they sound a lot less like a gold bug and more like Ben Bernanke:
…The risk is that policymakers will repeat these prior actions once the current easing cycle produces better economic growth, leading to a renewed slowdown in economic recovery.
Yes, you read that right. They are more concerned with any end to the Fed money spigot than your average stock hawker on that previously mentioned business channel. Of course, it is entirely possible that they don’t actually believe this part, but who could blame them for wanting to. If anyone is going to benefit from the U.S. Government spending money it does not have by borrowing it from China, it would seemingly be the folks at CAT. And it’s not just for the U.S. that they have some helpful suggestions. They are under the bizarre assumption that Europe is being far too stingy with their money flows:
We believe the Eurozone just completed its seventh quarter of recession, resulting in both the lowest construction and highest unemployment in the last 20 years. Despite these problems, the European Central Bank (ECB) has not taken actions in-line with other central banks.
Again, it’s not hard to see why they would want to believe this stuff. But with record debts all over Europe and here in America and interest rates near zero, the case for even more of the same seems a little too transparently self-serving. However, when it come to taking the world’s economic temperature, there are few sources with more credibility than CAT. And if they say that growth is slowing, well, I believe them.