Here’s a nice macro look at the world through the eyes of Caterpillar, the global construction and mining company. Jordan Weissmann of the Atlantic broke down Cat’s sales by region. His conclusion:
“But breaking down Caterpillar’s sales by geography, as I’ve done in the chart below, also tells us about the strange, precarious position that the world’s in these days.
Here are the two lessons we can draw from these numbers. First: Right now, the globe really may well be riding on the back of America’s limping economy. Second: There are still enough countries clamoring for resources like coal and oil that whatever growth we manage will be expensive to fuel.
Now here’s how we get to those lessons. Notice, the U.S. is the only country where building equipment sales actually grew. That’s because U.S. construction spending, while still well below its pre-recession peak, is back on the rise, and contractors are replacing old gear. Sales in China, meanwhile, were slow enough to eclipse gains in the rest of the Asia/Pacific region. Europe was flat, which sadly qualifies as a pleasant surprise. We’re speeding up our building. The rest of the world, by and large, is not. “
Also interesting were these comments on Cat’s conference call yesterday:
“Bottom line, we believe that some of the uncertainty that’s facing the world economy today will at least be a little less cloudy by the time we get to the end of 2012. and as a result of numerous monetary easing actions that have been taken around the world, we’re cautiously optimistic that the world economy in 2013 will be better than in 2012.”
Limping along on the back of America’s meager recovery with some of the uncertainty clouds set to part in the coming quarters. But the question still remains – will the fiscal cliff send us over the edge or will policymakers do what needs to be done to ensure we don’t fall over?
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.