While politicians debate whether there is a recession in the United States or not, the economic landscape looks bleaker with each passing day. Last month a classic trading house was sold for pennies on the dollar, the sub-prime lending crisis is leaking from mortgages to other markets such as education loans, and the S&P 500 stock index has lost 10.3% of its value since the Federal Reserve started cutting interest rates in September 2007. Meanwhile, the dollar continues its slide against the pound and euro, and fears of inflation both at home and in developing countries (the ones supplying many of the world’s manufactured goods) lurk at the threshold.

How should U.S. companies react? In “Bringing Home the Localization Bacon” (June 2002), we wrote that “Planners at successful global companies feel that they’ve done better than their domestic counterparts exactly because they’re international. Besides being able to sell into markets around the world, they can use their multinational portfolios to smooth the peaks and valleys of individual markets. For example, many large manufacturers find that they must pay close attention to world markets, recognizing that each region comprises a major chunk of their revenue. That way, when the Japanese economy slumps, they might increase their investment in healthier markets like Europe or Latin America that might be firing on all cylinders.” And right now, it feels like the award for Most Slumping Economy should go to the United States.

The combination of the recession agita and weak U.S. dollar have led different sectors to put more emphasis on drawing in foreign sales.

• High-tech firms continue to look abroad for revenue. In an article about the slowing U.S. economy, Business Week noted that “the strongest U.S. companies may be the ones with the biggest footprint abroad.” It goes on to note that in 2008 “tech spending in the States is expected to slide, while growth abroad maintains the same clip.” In its recent quarterly profit statement, Oracle noted that its sales fell short of analyst projections, but its profit was up 30%. The company is optimistic about the future because Oracle, like many high-tech companies, gets about half its revenue from outside the U.S. — our research tells us that companies often earn a higher margin on sales overseas.

• U.S. cities roll out the welcome mat. Anxious to book some revenue from international shoppers and tourists, American cities are putting on the charm for their foreign guests, according to the New York Times. Hopefully the shoppers won’t be put off by the sometimes frustrating U.S. policies toward international visitors.

• Colleges desperately seek higher-margin students. Business Week notes that “An American Ivy League education has long been prized by wealthy families in Asia, the Middle East, and elsewhere. Now more and more middle-class kids, whose English-language skills won’t pass muster at universities, are discovering two-year programs…schools are ramping up their global marketing efforts” to attract international students who pay 2 to 10 times more per college credit than American students.
• Farmers benefit from rising commodity prices. As economies develop, people travel more and eat more grain-fed beef. U.S. agriculture is no longer able to keep up with international demand for grain for food, feed, and biofuel production. According to the New York Times, “Many factors are contributing to the rise [in grain prices], but the biggest is runaway demand. In recent years, the world’s developing countries have been growing about 7 percent a year, an unusually rapid rate by historical standards.”

The bottom line: Companies whose domestic customers are reluctant to pull out their wallets should look abroad for the revenue they’re not finding at home.