From The Associated Press
GE’s Immelt warns less lending, high unemployment to drag on US economic recovery
SINGAPORE (AP) — General Electric Co. chief executive Jeffrey Immelt warned Tuesday that high unemployment and slower lending will drag on U.S. economic growth, likely resulting in the weakest recovery in decades.
“There are reasons to believe that this recovery could look different from ones in the past,” Immelt said in a speech in Singapore. “There’s not a lot of confidence that it’s going to be great.”
Immelt suggested the world’s largest economy could be facing its slowest recovery from a recession since before the 1970s as increased government regulation and bank consolidation pinch off available credit.
Joblessness, which reached a 26-year high of 9.7 percent in August, will also weigh on growth by undermining consumer spending, he said.
“Easing up money has always been the elixir to keep the economy in recovery mode,” Immelt said. “But once you get interest rates to zero percent, you can’t go much below that, which is kind of where we are right now.”
“A lot of the jobs lost in financial services and construction are never coming back.”
GE, which employs more than 300,000 workers in 100 countries selling everything from microwaves to wind turbines to financial services, is hiring 1,000 salesmen to boost sales in China’s west and north, part of the company’s strategy to keep revenue in the world’s third-largest economy “booming.”
GE said in July that second quarter profit fell 49 percent from a year earlier to $2.6 billion, led by an 80 percent drop in net income from the GE Capital unit. More than half of the Fairfield, Conn.-based company’s revenue comes from outside the U.S.
“How the Chinese economy does in the short-term is probably more important than sitting there praying for a robust recovery in the U.S.,” he said. “I bet they make it through this crisis and come out stronger.”
Immelt, 50, said he recently shook up the management of the company’s India operations in a bid to spark sales.
“We have $3 billion in revenue and we ought to be twice that size,” he said. “It’s been frustrating to me that we can’t be even bigger.”
GE will likely boost investments in Indonesia while operations in Malaysia and Vietnam have been “successful,” Immelt said. “It’s probably time to make a bigger statement in Indonesia,” he said.
