Caterpillar's Strong Profit Suggests Global Economic Growth

Cat expects world growth at 3.5% but developing regions' GDPs will grow at 6% in 2011

Heavy equipment maker Caterpillar's quadrupled fourth-quarter profits and vigorous 2010 rebound reflect strong demand in developing nations and offer reasons for optimism about the global economy and the prospects for other American manufacturers.

"They are a pretty good barometer," analyst Jeff Windau with Edward Jones said of Caterpillar.

That's because Caterpillar sells its yellow-and-black mining and construction equipment around the world and can benefit from growth wherever it's occurring, while its reach also means the company's business reflects global economic trends.

Caterpillar predicts the world's economy as a whole will grow at a lukewarm rate of 3.5 percent in 2011, but developing regions will grow at nearly double that pace and continue buying equipment for mining and for upgrading their infrastructure. (More from the Associated Press at . . . )