As the U.S. recovery enters a new and challenging phase, U.S. President Barack Obama is turning to a high-profile corporate executive to act as his top outside economic adviser.
On Friday, Mr. Obama appointed Jeffrey Immelt, the chief executive officer of General Electric Co., (GE-N19.741.317.11%) to lead a panel of experts charged with boosting job creation and competitiveness.
Mr. Immelt is replacing Paul Volcker, a former chairman of the Federal Reserve, at the head of the panel. The shift from a titan of economic policy to a sure pair of corporate hands is a telling symbol of where the recovery stands and where Mr. Obama sees political obstacles.
Mr. Volcker’s skills played to a moment when the U.S. economy required a form of triage. Today’s dilemma is more akin to long-term rehabilitation: The economy is growing and corporate profits are thriving, but jobs remain scarce.
“The past two years were about pulling our economy back from the brink,” Mr. Obama said in an appearance with Mr. Immelt at a GE factory in upstate New York that manufactures steam turbines. “The next two years, our job now, is putting our economy into overdrive.”
By appointing Mr. Immelt, Mr. Obama is taking another step in his campaign to mend bridges with corporate America, a political priority ahead of the 2012 elections. The President recently appointed William Daley, a former executive at JPMorgan Chase & Co., as his new chief of staff. He has also called for streamlining the tax code and overhauling business regulations.
Mr. Immelt, 54, will take on a highly visible role working on what is perhaps the President’s top concern – bringing down the stubbornly elevated U.S. jobless rate. “Persistent and high unemployment – and the pessimism it breeds – should not be accepted,” Mr. Immelt wrote in an opinion piece Friday in The Washington Post. “We must work together to construct an economy that creates more opportunity for more people.”
In December, the U.S. jobless rate fell to 9.4 per cent, the lowest figure in 19 months but still painfully high for millions of out-of-work Americans. Some of the improvement came from increased hiring, but part of it stemmed from a chunk of people dropping out of the labour force, often a sign they’re too discouraged to keep looking for work.
One of the key pieces of the U.S. job puzzle remains the hiring behaviour of large businesses. After slashing expenses and staff during the downturn, they rode the economy’s gradual improvement. Publicly listed firms have seen a return to bumper profits – in the third quarter of 2010, earnings surpassed the prerecession high. Many have amassed stockpiles of cash that they remain reluctant to deploy in ways that would spur economic growth.
According to the latest figures available from the Federal Reserve, U.S. non-financial firms are holding a greater percentage of their total assets in cash than at any time in the last 50 years. But uncertainty about the vigour of the recovery and policy ambiguity leading up to the midterm elections have kept companies from making large commitments on hiring and investment.
In one example of corporate America’s robust health, GE, an industrial and finance conglomerate, reported Friday that its pipeline of new orders had increased to its highest level since 2007. The company’s profit, meanwhile, jumped 52 per cent in the fourth quarter of 2010 compared with a year earlier, surpassing expectations. Mr. Immelt said he saw “encouraging” signs in the U.S. economy, pointing to a “broader and deeper” recovery.
In a conference call, Mr. Immelt reassured analysts that his role on Mr. Obama’s panel wouldn’t diminish the energy he brings to his day job at GE. “I am committed. I am a hard worker. I am focused on the company,” he said.
Mr. Immelt is one of several high-profile business leaders who have voiced support for Mr. Obama’s policies. They include the CEOs of Boeing Co. and Motorola Solutions Inc., and the chairman of Honeywell International Inc.
With files from Bloomberg News
No comments:
Post a Comment