The least reassuring headline you will read today—and it may not get much attention with all the budget talk going on—is from our friends at Reuters:
White House Not Worried About Double Dip - White House economic adviser Gene Sperling said on "Fox News Sunday" he was "not worried the U.S. will have a double-dip recession" – Reuters
The reason this is not as reassuring a headline as it might appear is that it comes amidst an earnings season that, aside from a few leading lights (mainly in the technology field and those companies doing significant businesses in Asia), has yielded news from the ground which is not nearly so perky as the ‘30,000 foot view’ preferred by lofty economics advisors such as Mr. Sperling.
Pepsi, for example, had the following to say recently about its U.S. business two weeks ago:
“Of the three factors impacting North American beverages—inflation, consumer demand and pricing—the consumer demand picture is the most concerning to us at this point. In fact, the modest pickup in total consumer sending almost all U.S. businesses saw earlier in the year has reversed in the past several months.”
And it isn’t just North American where things are wobbly. Newell Rubbermaid warned last week:
“Unfortunately we are seeing a softer economy in the US and Europe than we would hope for.”
Indeed, this morning, Armstrong World Industries added its voice to the chorus:
“We now expect our residential and commercial end markets opportunity to be slightly lower as the domestic economic recovery appears to be delayed.”
There are many more examples of the sudden bloom of cautious commentary from businesses. HSBC, no slouch in the world of global banking, this morning announced plans to cut 25,000 jobs—only a few days after the FT leaked that the company was going to “trim 10,000 people.”
One might say HSBC “beat the number”…but in a double-dip sense.
Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett”
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