In a globalizing economy, can economies actually decouple from each other?
Many economic experts argue that decoupling — the idea that big economies outside the United States might grow despite a slowdown here — is more illusion than reality.
Yet companies see it happening, right now, in their results.
Decoupling is not as simplistic as things going badly in the U.S. and economies remaining robust in the rest of the world, Cisco CEO John Chambers said in a Financial Times interview.
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"It’s really about relationships none of us completely understand.”
Yet Chambers was quick to point out that while problems in the U.S. economy certainly affect the rest of the world, they in fact no longer control other economies.
"It’s not like the days of old when the U.S. got a cold and everybody else got pneumonia," Chamber said.
A cursory glance at the latest results confirms that the robust economies of Asia and Europe have one big thing in common: They buy American.
That’s because a weak dollar makes U.S. goods cheaper for foreign consumers.
In addition, foreign currency earnings — money made in yuan, rupees and reals — translate into higher revenues when converted back to U.S. dollars, as Microsoft Corporation well knows.
International sales now account for 60 percent of the software giant’s business.
And Microsoft is not alone.
"Two-thirds of our sales came from our international subsidiaries, and growth in many developing economies enabled us to overcome economic challenges in the U.S. and to fund investments to secure the future of our enduring franchises,” notes 3M CEO George Buckley.
Excluding a $422 million gain from the sale of its European pharmaceutical business, recent 3M earnings rose 7.8 percent.
A year ago, Ford Motor reported a net loss of $282 million. Now it reports an unexpected quarterly profit driven by sales in Europe and South America.
Though the company has cut domestic sales forecast for the rest of this year, Ford reported net income of $100 million and a profit from continuing operations of $525 million, excluding special items.
Despite weakness in GE Capital’s consumer-credit holdings, for which CEO Jeff Immelt got a very public rap on the knuckles from former CEO Jack Welch, GE’s industrial portfolio is increasingly international.
And GE is still growing solidly, especially its transport, oil, gas, energy and aerospace infrastructure units.
Healthcare conglomerate Abbott Laboratories enjoyed double-digit first-quarter growth across all sectors of its pharmaceutical, medical and nutritional products, much of it fueled by international sales that boosted profits by 34 percent.
Heavy equipment maker Caterpillar’s first quarter profit rose by 13 percent, easily exceeding Wall Street estimates, as strong international sales of the company's bulldozers and other heavy construction equipment more than compensated for weaker North American sales.
Starwood Hotels, which includes Sheraton, Westin and luxury brands like St. Regis and W, reports revenues per available room rose by 8.2 percent domestically — and by 12.3 at the its international properties.
Starwood CEO Frits van Paasschen expects robust international growth to continue to offset declining domestic bookings.
"With 55 percent of our 120,000 room pipeline to be built outside of the U.S., we continue to expand our lead in international markets with strong new unit growth expected over the coming years," van Paasschen told Forbes.
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