While some experts predict a recession on the horizon, others say one’s here now. According to the latest round of corporate earnings, profits have contracted for two straight quarters, meaning companies are now in an “earnings recession.” “With a recession still looming, it’s unlikely that earnings have hit rock bottom,” said Michael Arone, chief investment strategist for State Street’s SPDR Business. Top economist David Rosenberg says a recession is not looming— it’s already here. “Averaging it (GDI) out with GDP, the economy has contracted for back-to-back quarters and in 4 of the past 5! The recession has arrived and nobody’s noticed,” Rosenberg said in a tweet Thursday. Amid these worrying data points, many are concerned with how the debt ceiling deal will affect Social Security. President Biden agreed to retreat from his crackdown on tax cheats, and with tax cheats stealing about $470 billion a year and Social Security running an $80 billion annual deficit, signs may point to a crisis ahead.
AP via The Seattle Times/Damian J. Troise
Recession ahead? By this metric, one’s here now: Earnings fall and Wall Street fears worse to come
The latest round of corporate earnings is leaving Wall Street with a confounding sense of relief and lingering anxiety.
Companies are in the midst of an “earnings recession,” meaning profits have contracted for two straight quarters, starting with a 4.6% drop at the end of 2022.
Profits for S&P 500 companies shrank just over 2% last quarter, compared with forecasts of a 6.7% drop. That brought some relief to Wall Street that the quarter wasn’t as bad as it could have been. But, analysts also expect more pain ahead.
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Fortune via Yahoo Finance/Prarthana Prakash
Top economist David Rosenberg says we’re already in a recession, but ‘nobody has noticed’
For over a year now, so many people have feared the “R” word coming for the economy that this hypothetical recession has likely become the most widely predicted in history. Why did a recession seem inevitable? It could have been the 10 back-to-back interest rate hikes since last March, or the subsequent drag on housing market activity, or the large-scale culling of jobs across sectors and an extended stock market rout in 2022 that left the economy, especially the tech sector, on edge. Or it could have been all of the above (plus inflation.) But now, a well-known economist says we don’t need to look on the horizon for a recession to come—it’s already here and we all missed it. We were looking in the wrong place, he says.
“Nobody talked about the release of real GDI today,” David Rosenberg, the founder of Rosenberg Research and formerly a chief economist on Wall Street for roughly two decades, at Gluskin Sheff and Merrill Lynch, wrote in a tweet Thursday, referring to the gross domestic income numbers that came out the same day.
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Opinion: There’s a clause in the debt-ceiling deal that means bad news for Social Security
If there were no tax cheats in America, there would be no Social Security crisis. Benefits could be paid, and payroll taxes kept the same, for the next 75 years.
That’s not me talking. That’s math. It comes from the number crunchers at the Social Security Administration and the Internal Revenue Service.
And it explains why those of us who support Social Security should be pounding the table in outrage over one clause of the Biden-McCarthy debt-ceiling deal: the part where the president has to retreat from his crackdown on tax cheats just so McCarthy and the House Republicans would agree to prevent the federal government from defaulting on its debts.
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