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The Revenue Recession

What do General Motors, JPMorgan Chase, Microsoft, IBM, Proctor & Gamble, Citigroup, Johnson & Johnson, Coca-Cola, Oracle, and Caterpillar all have in common?

1) They are among a long list of S&P 500 companies with negative year-over-year revenue growth.

2) They are not in the Energy sector.

With 80% of companies already reported, S&P 500 sales are on pace to decline (year-over-year) by 3.1%, the second consecutive quarter of negative growth.

The last two times we saw declines in revenue growth were back in 2008 and 2001, during U.S. recessions. Today the U.S. economy is still expanding, but corporate sales are not. Much of this decline has been blamed on the stronger Dollar which has made U.S. multinationals less competitive.

Indeed, the Dollar’s historic advance over the past year has been problematic for companies with overseas business, and I have described it as the Black Swan in plain sight.

But it is not just the stronger Dollar that is to blame. Nominal GDP growth in the U.S., at 3.3%, is the slowest on record for an expansion. In fact, we have seen many recessions with higher nominal growth than this. It should hardly come as a surprise, then, to see corporate profits slowing as well.

“It’s Just Energy”

With the U.S. stock market still higher over the past year, many have dismissed the decline in company sales. “It’s...


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