The American Economy in a Nutshell: Flat Revenues, Great Earnings

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The Wall Street Journal reports that American firms are struggling with falling prices due to weak consumer demand:

With about half of companies reporting year-end earnings, Thomson Reuters estimates revenue for companies in the S&P 500 stock index rose just 0.9%—capping two years of lackluster revenue growth and tying the third-weakest quarterly sales growth since the fall of 2009….The persistent weakness in revenue also prompts companies to cut back costs and plow their spare cash into share buybacks instead of investments like new factories and hiring. Fourth-quarter earnings, as a result, are expected to be up 9.4%.

There you have it. Earnings are up nearly 10 percent—because companies are cutting staff—and revenues are essentially flat—because workers have no money. This is the American economy in a nutshell. Solutions welcome.

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