Average weekly earnings, adjusted for inflation, fell 0.3% last month on top of a 0.1% decline in January. Over the past year, this important measure of consumers’ buying power is down 0.4%. Another major drag on comsumption can be seen in this chart of the price of gas.
Further diminished discretionary income does not support growth in the US economy. GDP growth is likely to disappoint in Q1.
A couple of stories sent to me today are worth a read and some reflection (thanks Chris):
Oh yes, and more on Muppets, enjoy.
Just a few weeks now ’til first quarter earnings seasons kicks off on April 10. S&P is forecasting full-year earnings growth of 5% in 2012 for a record $105 a share for the S&P 500 companies. But after a remarkable 28% rebound over the past 5 months in US stock prices, valuations seem truly primed for perfection notwithstanding an economic backdrop of slowing global growth. For those who forget, we are coming off last quarter where a low 63% of S&P 500 companies beat earnings estimates in Q4 2011 (a “normal” beat rate is well above 70%). And the Q4 beat rate would have been more like 55% if not for the star power of blowout quarters from Apple and Caterpillar.
Over the past few weeks, companies themselves have been trying to prepare shareholders for a letdown, with negative pre-announcements now at their highest level since the March 2009 market lows. So far it seems at least six of the 10 S&P 500 sectors are likely to see earnings declines in Q1.
Meanwhile money continues to pour out of domestic stock-based mutual funds, with another $2.84 billion leaving last week, according to the Investment Company Institute. See: Market’s Next Big Worry.
Maybe Muppets are not so plentiful as Wall Street assumes after all.
