Is the U.S. in a recession yet…just look at GE’s bottom line

Because of its diverse operations, GE is considered by many analysts and investors as a “bellwether” company. This means that when the company is meeting or exceeding profit forecasts, the economy is probably doing extremely well. However, when GE starts to miss forecasts, it makes Wallstreet nervous. It is viewed as a sign that poor economic conditions may be ahead.

On Friday, April 11, GE reported a quarterly net income of 43 cents ($4.3 billion) per share. This was down 1 cent per share for the same period a year earlier. GE projected net income at 50 to 53 cents per share. Analysts indicated that even though some of GE’s businesses had strong performance, the financial unit impacted the bottom line the most.

After GE made these announcements, the rest of the market felt the affects too. GE’s stock fell nearly 13% and the DOW fell 250 points. I looked in my own portfolio and not one stock that I own was up for the day.

I think it is a bit ridiculous that GE’s stock took such a huge beating. I am a little bit biased because I own shares of GE, however, the company is still making money. Last I checked $4.3 billion in profit was a pretty nice chunk of change. I think I understand Wallstreet’s fear of a recession, but why does GE’s share prices have to take such a beating?

I hate to say it, but I think we’re already in the middle of a recession and still haven’t reached the bottom yet. The country is just now starting to notice the major signs – layoffs and job losses, not buying new “toys” and gadgets, and putting major purchases on hold.

Thank you GE and Wallstreet for letting us know about the recession.

Note: This is a guest article, written by Tim Morrison and published with permission of Sharad Mangalick.

Note 2 [sharad]: I'll let the readers decide if this is a great article or not :)