Heading Closer and Closer to the Recessionary Wall

Much of the financial information we get on a daily basis tends to shape our perspectives of how the economy is doing.  Unfortunately, much of that data tends to be a first pass WAG (wild-assed guess), which has often proven to be more wrong than right.

Take the the numbers for job creation, which are released monthly by the BLS, for example.  They are definitely NOT rooted in reality.  But what happens is when the revision for a month comes out, the attention is focused squarely on the new WAG for the most recent month.

Other economic numbers of varying degrees of significance experience similar releases, and are also, more or less WAGs.

I have, over the course of the last 10 years, been working on a different approach, although it lags the headline grabbing urgency of a July number for job creation, for instance.  No, instead, my numbers crawl along slowly, three to four months behind.  But they are clearly superior.  I do not give you false hope with WAGS.  I do not sound false alarms with WAGS.  I also do not have to provide seasonal adjustments or other economic tricks.  I have no reason to inject bias into the numbers.  They are what they are.

While many economists also love to focus on top line growth, I have been dissuaded from putting too much importance on that line.  Instead, it’s the bottom line growth that drives the US economy forward in the long term.  This line is where the dollars come from for new expansion, new pay increases, new product development: the keys to real growth.

And unfortunately, the news I have to share is not positive.

Per Share Profit Growth

 

Here is a chart depicting the rate of profit growth year over year for the last four quarters on a per share basis for 1625 companies I track.  So, had you owned one share in each of these companies, one year ago and today, you would have seen your earnings grow by 5.27%, down from 8.40% a year ago, and 34.64% four years ago.Read more

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This entry was posted in Economy, Finance, Politics by EJ Moosa. Bookmark the permalink.

About EJ Moosa

EJ Moosa believes that a smaller government is a more efficient government. He believes that better analysis leads to better solutions. A graduate of Georgia State University In Business Administration, EJ grew up in Cobb County graduating from Osborne High School and worked at several Atlanta companies including First Atlanta, IBM, and Six Flags over Georgia.

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