US Corporate Earnings: A Barometer for the Global Economy

As the world's largest economies prepare to release their quarterly earnings, a slew of corporate giants will be lifting the lid on their financial performance. The US is at the forefront, with major players such as Coca-Cola, Goldman Sachs, and Microsoft set to release their numbers. This earnings season is being closely watched, not just for its impact on individual companies, but as a barometer for the health of the global economy.

Key Takeaways:

• The US economy is expected to grow at 3.3pc in the third and fourth quarters, leading to 2011 growth of 2.7pc, according to economists.
• The unemployment rate ticked up to 9.2pc, with average earnings growth falling to an annual 1.9pc, and consumer prices rising by 3.6pc year-on-year.
• The state of the jobs market and consumer spending will continue to be a major concern for US consumer-facing companies.
• The Federal Reserve chairman, Ben Bernanke, may use the earnings numbers to inform his decision on further quantitative easing.
• Corporate earnings and domestic economic health may seem dislocated due to the growth of emerging markets.
• The earnings season will drive sentiment globally, particularly in boardrooms and stock markets.
• The outcome of this earnings season may influence Bernanke's decision on further monetary policy.

Statistics:

• US GDP growth forecast: 3.3pc (third and fourth quarters), 2.7pc (2011)
• Unemployment rate: 9.2pc
• Average earnings growth: 1.9pc (annual)
• Consumer prices growth: 3.6pc (year-on-year)
• Emerging markets growth: significant, contributing to dislocation between corporate earnings and domestic economic health.

Sources:

• "US Corporate Earnings: A Barometer for the Global Economy" by Jonathan Sibun, The Telegraph