AP Business Writer
Big companies are finally starting to spend money, and that could mean a better economy and more jobs are on the way.
Industrial companies such as General Electric, Honeywell and Caterpillar make expensive equipment that other companies need to buy to grow their business. They’ve been posting strong financial results in recent weeks and telling investors that orders are strong.
“We’re on the brink of that inflection point where the economy can really take off,” says Diane Jaffee, a portfolio manager and managing director at the Trust Company of the West. “What’s different now is that the industrial companies are saying there is real demand.”
In the years since the Great Recession, big industrial companies have cut costs, slimmed down their operations, and gathered cash. They’ve had to because their customers — other big businesses — have always had something big to worry about. Even after the U.S. economy finally started to gain strength, political wrangling shut down the government and periodically led the country to nearly defaulting on its debt. At the same time, Europe was mired in a debt crisis and a subsequent recession.
Now, finally, the U.S. and European economies are showing steady progress, and while China’s growth appears to be slowing, its economy remains strong.
“Many companies are just more confident in the business climate this year than they were last year,” says Jim Russell, senior equity strategist at U.S. Bank Wealth Management.