Here's Caterpillar's Concise Assessment And Outlook For The Global Economy

Caterpillar manufactures and sells construction and mining equipment all over the world. As such, it is extremely sensitive to global economic activity, and its management offers unparalleled insight into the health of the world.

As we learned earlier today, Q3 earnings fell short of expectations and management also cut its outlook for the full-year.

Here are the four paragraphs from the company's earnings announcement that characterize the world in which the company operates. They include quotes from CEO Doug Oberhelman:

From an economic standpoint, the company expects better world growth in 2014. However, significant risks and uncertainties remain that could temper global economic growth. The direction of U.S. fiscal and monetary policy remains uncertain; Eurozone economies are far from healthy and China continues to transition to a more consumer-demand led economy. In addition, despite higher mine production around the world, new orders for mining equipment remain very low. As a result, the company is holding its outlook for 2014 sales and revenues flat with 2013 in a plus or minus 5 percent range. The company expects sales growth in Construction Industries, relatively flat sales in Power Systems and a decline in Resource Industries' sales.

"There are encouraging signs, but there is also a good deal of uncertainty worldwide as we look ahead to 2014, and our preliminary outlook reflects that uncertainty. Despite prospects for improved economic growth and continued strong mine production around the world, we won't be increasing our expectations for Resource Industries until mining orders improve. We can't change the economy or industry demand, but we've taken many actions to align our costs with the environment we're in currently. While we've done much already, we're not finished and expect to take deeper actions to improve our cost structure and balance sheet. We're not seeing bright spots in mining yet, but the turnaround will happen at some point, and when it does, we'll be ready to respond," Oberhelman added.

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World purchasing manager surveys for both manufacturing and services have improved in recent months, signaling the world economy is rebounding from more than two years of slowing growth. Recent economic indicators also suggest that growth in the United States, Europe, Japan and China in 2014 should match or exceed 2013 growth. Better growth in these key economies would improve export opportunities for other countries and increase commodity demand. We expect world economic growth will improve from 2.1 percent in 2013 to about 3 percent in 2014.

However, significant risks and uncertainties remain that could temper global economic growth in 2014. The direction of U.S. fiscal and monetary policy action is highly uncertain; Eurozone economies are far from healthy and China continues to transition to a more consumer-demand led economy. In addition, despite higher mine production, new orders for mining equipment remain very low.