Future Elsewhere

'Jobless Recovery' May Help Some Stocks By DIMITRA DEFOTIS THREE YEARS INTO an economic recovery, employment growth has stayed stubbornly weak. Non-farm payrolls, a measure of job creation, rose 1% from the beginning of the recovery in late 2001 through the end of 2004. They've picked up a bit lately, but the overall trend remains anemic compared with the 4% job growth we saw over the same period following the 1990-1991 recession, according to Ehrenkrantz King Nussbaum, a New York securities firm. Why the change? Technology and outsourcing have boosted productivity, and corporate earnings have grown strongly even without companies doing much hiring. Analysts surveyed by Thomson First Call expect stocks in the Standard & Poor's 500 index to show earnings growth of 6% this year, following 19% growth in 2004. ...

GE Pins Hopes on Emerging Markets Strategy Is Major Shift From Reliance on the West; Big Rivals Echo Approach By KATHRYN KRANHOLD Staff Reporter of THE WALL STREET JOURNAL March 2, 2005 General Electric Co. expects to get as much as 60% of its revenue growth from developing countries over the next decade, Chairman and Chief Executive Jeffrey Immelt said in the company's annual report. After nearly four years of reshaping the company through $60 billion in acquisitions of financing, water treatment, security systems, bioscience businesses and a movie studio, Mr. Immelt said in his letter to shareholders, "we have prepared to make our own growth in a slow-growth, more volatile world." The strategy, which Mr. Immelt has discussed inside and outside the company in recent months, marks a major shift from the past decade when just 20% of the conglomerate's revenue came from developing countries. Instead of counting on the U.S. and Europe, GE now is looking to China, India, the Middle East and Asia to buy its turbines, aircraft engines and medical devices. In addition, it expects to sell mortgages and credit cards to a growing middle class in Eastern Europe, including Russia, and Southeast Asia -- and eventually China. Some developing countries, China in particular, are growing at rates high in the single digits, compared with 3% to 3.5% for the U.S., and half that for Europe and Japan. GE's outlook is echoed by most multinationals, many of them rivals such as Siemens AG and Philips Electronics NV, and financial-services giant Citigroup Inc. Like GE, these companies are dealing with how to grow in the face of a slower U.S. and European economy. For most of them, that means moving deeper overseas -- in some cases, building manufacturing plants and buying materials in those countries while selling lower-price products such as medical equipment. It also could mean more job cuts in the U.S., and even Europe, as the multinationals seek new markets for their products.... By 2024, GE estimates China will be the largest consumer and consumer-finance market -- and be the largest consumer of electricity in the world. To be successful there, companies must make concessions, such as sharing technology with the Chinese, who eventually want to make their own turbines, medical equipment and other sophisticated products. Additionally, companies are investing in research centers and crafting partnerships with government-owned entities to give them a more-favored status with the Chinese government. Mr. Dray, the analyst, notes that such investments give companies like GE favored status when they are bidding on projects.