24/7 Wall St.

For years, GE (GE) has been considered the single best corporate proxy for the US economy. For years it led all American companies in market cap. It businesses range from entertainment to medical equipment to infrastructure services to finance. It be hard to find as broad a representative for the scope of American business. Or is it?

GE has fallen out of favor and now it is selling one of its oldest businesses, its appliance operation. Investors have been calling for a break-up of the parent company for years. When the firm had a bad quarter earlier this year, the pressure to do something radical with the company increased. The appliance company auction is throwing the dogs a bone.

If GE is the best measure of the economy, then the economy is in bad shape. GE trades at $32.51, near its 52-week low and at about the same level as when Jack Welch left to marry his lover, the former editor of The Harvard Business Review.

Despite its size, it is not terribly hard to make the case that GE no longer looks anything like the larger economy as a whole.

The companies at the top of the market cap list of US firms look very little like GE now. They include Exxon (XOM), Microsoft (MSFT), AT&T (T), Procter & Gamble (PG), Johnson & Johnson (JNJ), IBM (IBM), and Google (GOOG). In other words, a close look at the most success firms in the US, at least judged on market value, shows that GE is not like any of them in any way.

GE has become out of step with American business and the stock market as a whole because it has not sold "old economy" businesses and used the capital to buy "new economy" businesses.

Selling a division which markets refrigerators will not help that.

Douglas A. McIntyre