Don’t Be Fooled by Good Earnings

Earnings are great so far with 76% of the S&P 500 having already reported. Be careful, we are comparing it to the disastrous fourth quarter of 2008. For at least a year there has been talk of a double dip recession. We are making progress in the economy as a whole but we are still far from a recovery. The only thing that will signal a real recovery will be in the housing market. This will not happen until the 2006 vintage of mortgage loans commercial and residential will be cleaned off the books through refinancing or foreclosure.

While the right wing has always taken credit for tax cuts driving the economy, the real driver since 2001 has been the housing market. When it crashed so did the economy. Tax cuts aimed for high income earners are still there and it is not having any effect because everyone has cut personal spending to some degree.

The current drive from the left to make a “Green Economy” is noble. The benefits are reduced global warming, reduced energy consumption therefore reducing energy prices, and hopefully more jobs. None of it will happen fast enough with the current situation in Washington D.C. to make a difference.

Meanwhile the good earnings continue to come out from corporate america, but remember what we are comparing those earnings to. We are still hearing of ridiculous CEO pay but until the average American can work and invest and have an increase in their earnings we will still be far from a recovery.

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