Unfortunately, the United States is still in the middle of a recession/depression where depending on whose stats you listen to, between 10%-16% of adults can not find employment. Even at the low end, that is an alarming statistic that does not bode well for our national economy or the world economy. For our economy to do well, we need a larger percentage of people employed and contributing productivity.
But in the last week, three major companies released their quarterly earnings and based on the results, I have to wonder if the economy is really as bad as the media would have us believe or if there are parts of the economy that are doing well and that many of those that are unemployed are in industries that probably will not recover for a while or are supported by other industries.
Microsoft, Apple, and Google all released earning statements that far and away exceeded Wall Street expectations. What makes them important as I consider the real status of our economy is that for the most part they sell luxury items that in theory are not purchased as frequently during down times.
Microsoft reported revenue of over $19 billion and net income over $6 billion as sales of personal computers and it’s new Windows 7 software saw strong sales. Consumers are buying computers at a record pace during a recession?
Apple, which sells primarily high- computers and phones, also had a record quarter and sold the most Iphones that they have in any quarter. Sales of their Mac computer were also up. What is also interesting is that their future forecast is even more rosy with many analysts predicting even better quarters with the introduction of the Ipad. Consumers are buying $2,000 laptops and $400 phones during a depression?
Google which generates over 90% of it’s revenue from advertising also had a record quarter with revenues increasing by 19%. They also have a rosy outlook as they expect growth in display and mobile advertising although the company does not make future predictions. So companies are advertising at a record pace during a recession?
There are other factors to consider with Google’s growth, like the decrease in traditional media spend could more than offset their gains, but what I find interesting is that it is typically believed that in tough economic times, advertising is the first budget to be cut. But it looks like companies are still advertising and doing a lot of it.
So maybe the economy is not as bad as projected and that it would even turn around more quickly if all the doom and gloom stories would stop. The people that are employed would feel more comfortable making purchases again which would stimulate the economy and create jobs. There is still much to be said about the jobs that are going overseas, the transition from manufacturing jobs to service jobs, and the increase of automation. All those things have an impact, but based on the earnings that have been released in the last week, there is money being spent, so there is some upside to the terrible economic stories that we are force fed on a daily basis. Let’s try to stimulate the economy by changing the messaging about the status of the economy and I would be willing to bet that would have an instant impact and increase the number of jobs. That’s just my hunch.
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