Street and the mass media have a habit of
only highlighting the positive when it comes
to economic news. We dig deeper past the sugary
for instance, the latest gross domestic product
(GDP) report. Washington claims the economy
grew at a 2.4% annual rate in the second quarter.
That's still pretty lousy when you consider
that the economy must grow at a rate of over
3% in order to create jobs. But it's even
worse when you look at the details.
spending contributed more than three-quarters
of the 2.4% growth rate. Without defense spending,
the economy barely grew at all.
spending on durable goods was up slightly
but it was clearly because of bargain shopping.
Zero-percent financing, no-money-down offers,
and fire sales have allowed businesses to
clear out some inventory, but that doesn't
do much to boost profits nor does it mean
that consumers are willing to spend on anything
but deeply-discounted merchandise. And as
consumers snap up these deals, they're debt
levels are climbing higher and higher. This
is a recipe for disaster, not a recipe for
more evidence that Wall Street and the mass
media gloss over the bad stuff, just take
a look at some of the latest earnings reports.
Here's the rest of the story ...
Motors: Profits at the biggest automaker in
the world fell 30% in the second quarter versus
the year-ago period. In the meantime, profits
at the company's massive North American auto
operations plummeted 94% as price wars tore
Jones: Earnings at the Wall Street publishing
beacon plunged 43% in the second quarter as
advertising revenues from the company's flagship
Wall Street Journal tumbled.
The commercial and home appliance giant's
second quarter net income sank 63% -- to just
$25 million from $68 million in the year-ago
period. The culprit: Lousy market conditions
and a dismal performance by the company's
floor-care products division.
The world's largest aerospace company swung
to a loss of 24 cents a share in the second
quarter (from a profit of 94 cents a share
a year earlier) and lowered its earnings outlook
for 2003 AND 2004! That's not all: The airplane
making behemoth plans to shed another 4,000
to 5,000 jobs by the end of the year ... and
that's on top of the approximate 34,735 jobs
it cut so far.
line: Things aren't as rosy as Wall Street
says at many of the nation's largest companies.
a look at some of the other developments in
the economy and the markets ...
The housing market is sinking fast. Refinance
applications plunged an astounding 32.9% for
the week ending July 25. Mortgage rates are
rising and it's knocking the wind out of the
Consumer confidence is fading. The Conference
Board's consumer confidence index for July
fell to its lowest level in 4 months. The
war is over, the economy is supposedly rebounding,
and stocks are supposedly in a new bull market.
So why are consumers so pessimistic?
MORE bankruptcies. Mirant Corporation recently
became the 11th largest company to file for
bankruptcy protection in US history. And we
suspect that there are hundreds of other companies
still on the verge.
all of these stories, visit:
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