Caterpillar CEO: There will be no double dip
Doug Oberhelman hits out at Washington, Middle East looking strong
Caterpillar’s CEO Doug Oberhelman has hit out at politicians in Washington for stalling economic reform but is optimistic that the global economy will not be dragged into a double-dip.
He also added that the Middle East and Brazil demonstrated few signs of a potential slow-down.
In a frank interview with the Financial Times, Oberhelman says politicking is getting in the way of resolving crucial economic issues such as free trade agreements and infrastructure investment off the political agenda and threatens the US’ recovery.
Washington’s inability to come to a consensus on how the US should handle its massive $14 trillion debt which led to the controversial downgrading of the US credit status by Standard and Poor is seriously harming US competiveness against rivals in the global marketplace such as China, he said.
“The process was ugly and it [the downgrading] was a red herring of a problem,” he said. “The politicians turned this into this big giant thing that scares people. I’m equally critical of both sides.”
He continued: "This deficit debate sucked all the air out of Washington. Here we are with no free trade agreements, not anywhere in sight. Meanwhile, our competitors, led primarily by China, are signing up countries to free trade agreements.”
Despite Caterpillar missing analyst expectations in the second quarter and the woes of US industry, Oberhelman remains optimistic for the economy in 2011.
“Traditionally, we’ve been perceived as an indicator of the global economy. Investors are just nervous about the uncertainty of global economic growth,” he told the FT. “There won’t be a double-dip. I don’t see a return to high growth, but I think we’re going to bump along.
“There has been a slowdown in China, which is healthy,” he says. “Thank God it happened, because we were all rushing in there, committing resources, growing at rates that couldn’t be sustained over time. So now we’ll see a lower growth rate but one that’s still pretty high by world standards.
“We’ll see China reflate in the next few months, going into the Chinese New Year [in January],” he said. “That will remove a very large question mark in the world economy about what China’s going to do, which has been a big damper on sentiment.”
He added: “Brazil is red-hot. We’ve not seen any breather down there. The Middle East is still doing well, the mining business is still strong.”