by Pater Tenebrarum
Acting Man
Business under Pressure
A recent post by Mish points to the fact that many of the business-related data that have been released in recent months continue to point to growing weakness in many parts of the business sector. We show a few charts illustrating the situation below:
[…] Lastly, here is a chart recently presented by Albert Edwards of SocGen, which shows domestic economy-wide non-financial earnings growth in the US. Edwards argues that investment spending tends to follow profit growth, which intuitively makes sense (we offer an alternative explanation for this relationship below). He therefore expects the recent downturn in GAAP earnings to be followed by cutbacks in capital expenditures: