Economic Indicators Applicable to General Electric (GE) Domestic Operations

• Dawn E. Reisner

Relevant Economic Indicators

Economic indicators are used to predict, plan and navigate thru the complex activities of the business environment. General Electric (GE) produces diverse products and services from a variety of different business segments, so the company must utilize an exhaustive list of economic indicators in its decision-making processes. The scope of this overview is to analyze a representative group of those indicators that relate to the domestic activities of GE:

1. Business Tendencies and Surveys
2. Consumer Confidence Index
3. Industry Data by segment
4. Consumer Price Index
5. Producer Price Index
6. Purchasing Power Parities (PPP)
7. Political Forces
8. Demographic Assessment

Business Tendencies and Surveys

There are vast examples of business tendencies for the multi-segmented corporation of GE, but to consider just a couple, we can look at the (2) business trends that are driving GE’s Aviation business segment:

1. Air Travel Demand from Emerging Markets-Travel demand from emerging markets in other countries like China, India, South East Asia, and Africa will provide growth opportunities for commercial aviation estimated to be between 7-9%. Since GE’s engines are the ones most widely used in commercial aviation jets, they will be in high demand.
2. Shift of MRO (Maintenance, Repair, and Operations) from OEMs (Original Equipment Manufacturer) to suppliers. The trend of the past few decades has shown that customers have started to rely more on individual suppliers to service individual parts as opposed to the single shop of OEMs. This is a huge opportunity for GE since it has a relationship with all the OEMs that will give it a competitive edge to capture share in this part of the market. (Forbes, Trefis Team, 2012)

GE funded an initiative entitled the GE Global Innovation Barometer, which was conducted by StrategyOne, an independent research and consulting firm. 3,100 senior business executives were surveyed in more than 25 countries and the results were helpful in determining the global and domestic tendencies of multiple industries. Key determinations could be made about the state of innovation, partnerships, business models, government policies, and workforce preparation. (General Electic, 2013)

Trends in healthcare garnered from GE’s Healthcare Industry Research Update offer unique perspectives and analysis of the needs of the Health Care Industry in the United States. Since GE is a producer of medical equipment and supplies, the trends can be pinpointed and GE can base its productive strategies on the knowledge gained. Some of GE’s medical products include Mammography systems, Advanced Visualization via computers, Anesthetic Delivery systems, Diagnostic ECG, Contrast Media, Clinical consumables, and supplies. (GE Capital, 2014)

Consumer Confidence Index-CCI

“The idea” behind the consumer confidence index (CCI) “is that the more confident people feel about the stability of their incomes, the more likely that they are to make purchases rather than save their discretionary income”. (McWhinney, 2013) This is important for all of the business community, but for GE, the profits from sales of appliances needed in newly constructed homes would most certainly be affected. Consumers will not likely build a new home, let alone replace older appliances, if they are concerned about their income. GE surely benefited in 2012 when the consumer confidence rate was “at its highest level in five years” (Housel & Smith, 2012).

On the other hand, consumer confidence and GE took a hit when the U.S. Consumer Bureau ordered GE Capital Retail Bank and one of its subsidiaries, CareCredit, to refund up to $34.1 million to customers who it said were misled about healthcare credit cards. The cards were supposed to be interest-free, but were actually accruing interest that could kick in at the end of a promotional period. Incidents of this type will motivate GE to implement a clearer marketing strategy for its health care credit card in the future. (Reuters, 2013)