Business & Finance

Mixed views paint corporate America’s economic outlook


Rising stock market indices but falling employment and gross domestic product reveal varied views about how the U.S. economy behaves for the rest of the year.

Wall Street projections have set elevated levels since late last year in the Standard & Poor’s 500 index of big businesses, and the market performance has validated optimism.

Also, manufacturers and small businesses manifest confidence of an improving market. Increased consumer spending was likewise noted, even as retailers hike prices to offset rising commodity costs.

But the U.S. government’s most closely monitored economic indicators that serve as barometer for overall economic health condition like employment and gross domestic product remain sluggish.

According to Steven Ricchiuto, chief economist for Mizuho Securities USA, one reason for the seeming disconnect between Wall Street and the government data is where companies are making their money.

“Part of it is global versus domestic. If I’m doing well in my foreign business and that’s driving up my profitability…. then I’m a happy camper,” Ricchiuto said.

But the other side of reality is that many companies that rely on domestic consumption are struggling.

Many establishments that run restaurants, movie theaters or hair salons have taken a hit as consumers pull back on discretionary spending.

Wal-Mart, which has posted six consecutive declines in quarterly sales, is expected to hit low marks again.

Figures from Home Depot, Lowe’s and Sears also provide insight into homeowners’ spending, an important measure when the housing market remains one of the biggest trouble spots for the U.S. economy.

Meanwhile, the S&P Case-Shiller report on house prices which is due for release on Tuesday is expected to show downward trend.

Jon Mills

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