suzanne pratt reports. >> reporter: g.e. has long been considered a bellwether for the u.s. economy. that's because of its ginormous size and broad range of business-- everything from transportation to healthcare. today, g.e. reported its first increase in revenue in two years. analyst daniel holland expects g.e.'s recovery to accelerate. >> the company is getting much closer to firing on all cylinders. as we come through 2011 and going into 2012, you're really going to have g.e. performing the way that management would like it to see it performing and operating in the areas that g.e. considers core. >> reporter: that's good news for the u.s. economy and for those worrywarts still fretting about the pace of recovery. after all g.e.'s balance sheet is perking up because more company's are buying more of the things that g.e. sells. what better vote of confidence in the economy than some serious capital spending. >> that's really g.e.'s specialty is in big equipment, power generation equipment, healthcare equipment, engines things like that. and, so now we see more companies wi

suzanne pratt details what's likely for fourth quarter results. she also gives us an early peak at profit prospects for this year. >> talk a walk on a manhattan street, and you know the holiday season is over. for corporate america, however, another season is just getting started. that's the quarterly ritual of u.s. companies sharing their profits and sales with wall street and the world. the final quarter of 2010 should not disappoint. s&p 500 firms are expected to report year over year earnings growth of 32%, capping off a solid year for corporate profits. earnings expert ashwani kaul says the impressive q4 number is less about easy comparisons and more about cost-cutting, now part of corporate d.n.a. >> obviously companies are still using these uncertain economic times to trim some fat and reduce their cost structure. but, there's still some topline demand. as for that topline demand, firms are expected to report revenue growth of 6%. but s&p's mike thompson says that level is anemic by historic standards. >> we've been in a cyclical, you know,

suzanne pratt, "nightly business report," new york. klaus, happy new year and welcome back. >> hello, happy new year, susie. >> susie: all right, so you had a very bullish forecast for the year. and for the decade. what's going to drive that growth and are you basically saying that the global economy has turned the corner? >> well, i don't know whether i call it bullish. if you just look at aluminum demand 2010 we actually started out with saying demand will increase by 10%. and it ended up increasing by 13%. what we project for next year is 12% increase. >> susie: all right. but and where is that growth goinging to come from? we see that a lot of your business is in the united states and europe where the economies have been pretty weak. you have a low profile in china. are you goinging to be stepping up your business in china especially since a lot of the china is closing a lot of its out of date aluminum plants? >> well, this is the worldwide market so it's not about just going present there. but it's also about importing selling to

suzanne pratt gets some answers. >> reporter: since the great recession americans have gotten a lot more familiar with these little guys. that's because we're saving more, spending less and paying down debt. barbara whitehead, director of the templeton center for thrift and generosity, says our rediscovered frugality is here to stay. >> just even in a cultural way, it's a shift. it's a sort of change of pace. some people say they really enjoy that they slow down a little bit, or that they can be more thoughtful about what they do spend. >> reporter: economists aren't so sure and the data is starting to support their skepticism. the savings rate hovered near 0% in early 2008 after a decade of over-consumption. during the recession it surged to a 6.9%. but, in last six months it has trended lower recently slipping to 5.3%. why should we care about how much we sock-away. experts say a higher savings rate not only improves personal balance sheets. but it makes more money available for investment. but, economist yelena sholetuva says right now there's a downside to too much saving. >> the ong

we begin with suzanne pratt in new york. >> reporter: this is the proverbial hole the u.s. labor market still needs to climb out from. creating 100,000 new jobs a month, as we did in december, only keeps the hole from getting deeper. over the past three months, the economy has added an average of 128,000 jobs. that's just enough to keep pace with population growth. and, it's too little to cause a significant drop in the unemployment rate. economist julia coronado explains companies are holding back on hiring for reasons beyond just consumer spending. in addition, they now have the worry that other input costs pressures are rising. so, we're seeing lots of commodity pressures and they're worried about their operating profits getting squeezed. so, that makes them conservative. yes, the unemployment rate fell to 9.4% last month. but, experts say that happened because a quarter of a million people stopped looking for jobs. the government no longer counts them as unemployed. so, what does the latest job market snapshot suggest about the chances of getting hired in 2011? economis

suzanne pratt reports. >> reporter: guess what? the dow is now just a stone's throw away from 12,000. the blue-chip index was last at that milestone in the summer of 2008, right before the financial crisis hit. after plummeting below 7,000 in march 2009, the dow has bounced back, gaining a stunning 83%. so has investor psychology fully recovered from the lehman brothers bankruptcy and the stock market's violent collapse? n.y.s.e. specialist jonathan corpina says not quite. the fear is still in this market, but i think investors are starting to feel a little more comfortable with the market and the market structure. >> reporter: experts say a stronger-than-expected u.s. economy and solid corporate profits are behind the most recent push higher in stocks most agree the market is ripe for a correction, but strategist jim awad says it will be a pause that refreshes. >> we're in the sweet spot of the economic recovery with low inflation, growing economy, growing earnings. so, if there is a correction, it will be just a correction. absen

suzanne pratt reports. >> reporter: it's not easy being the federal reserve these days. talk up the recent strength in the economy too much, and financial markets will worry a hike in interest rates is coming. say something bad about the rising price of food or gas? same problem. economist aneta markowska says policymakers struck the right tone in the statement accompanying today's decision on rates. >> if they were a little bit too optimistic, the market would take that the fed is getting ready to start tightening, they're getting worried about inflation. and that would certainly not be a good message. so i'm glad they didn't go there, and i'm glad that they showed some caution. >> reporter: even with policymakers walking on eggshells, they made some minor changes to the statement language when compared to december's version. on inflation, the fed acknowledged commodity prices had risen but repeated its position that underlying inflation is still low. economist drew matus says also important was the central bank's characterization of the labor market. >> what they're re

suzanne pratt reports. >> reporter: it's a new year. it's a new decade. so is it time for a new portfolio? experts say radical changes are unnecessary for most investors. there is room for serious tweaking. tweak number one, market pros say investors should put more money into the stock market in 2011. and decrease their bond holdings. financial planner lew allfast is telling clients two-thirds of their portfolio should be in stocking and only one-third in bonds. it's what he calls a more normal allocation for more normal times. >> most people are still overweighted in bonds. that's the wrong decision to make for the new year. >> reporter: while stocks are expected to outperform bonds this year, it won't be all stocks in all sectors or sizes. some financial experts suggest investors up their holdings of large cap names, in particular those that pay attractive dividends. prudential financial strategist quincey crosbie says big u.s. companies are best positioned to benefit from an improving global economy. >> we are not suggesting that we just sell out of s

suzanne pratt, "nightly business report," new york. >> tom: tomorrow morning begins a parade of profit reports from the banking industry. j.p. morgan chase is the first big bank to turn in its financial report card. so what can investors expect from banks? fred cannon joins us with some answers. he's co-director of research and chief equity strategist at keefe, bruyette, and woods. >> thank you, tom, good evening. >> tom: how would you characterize the industry's earnings power ahead of the fourth quarter numbers due to begin tomorrow. >> a heck of a lot better than a year ago. we've seen some fundamental improvement for the banks during the last year and credit has gotten a lot better. so we think that the numbers will look good, certainly on a year-over-year basis. that said, there's a lot of headwind ahead of us for core earnings at the banks. which we can talk about. >> tom: exactly. i want to hear about that because diversified banks like jpmorgan tomorrow, bank of america in the week ahead, big national names are really kind of falling off the floor. a year ago they lost $11 bill