Strong earnings expected for 1Q
TEXT OF STORY
Bob Moon: Spring is in the air. So, too, is a strong earnings season. This afternoon, aluminum maker Alcoa kicks off as the first major company to release first-quarter results. Marketplace’s Brett Neely reports.
Brett Neely: How good are earnings supposed to be this quarter? Diane Swonk is chief economist for Mesirow Financial:
Diane Swonk: I think we’re going to see another very robust, strong double-digit earning growth across most industries, especially the non-financials.
But remember, that’s in comparison to last year’s numbers, when the economy was in the dumps. Swonk thinks few companies will fall short this quarter. That’s because consumers are finally spending again, albeit modestly.
Swonk says corporate cost cutting is still behind much of the growth in profits. That reminds her of another economic recovery:
Swonk: I remember the whole first half of the 1990s, everyone kept saying you can’t make money on cutting costs alone. Well in fact, cutting costs created a bit of a virtuous cycle in terms of spurring productivity growth, adoption of new technologies.
The stock market is up 75 percent from its low point in March 2009. That has some market watchers saying strong profit reports aren’t going to pull up stock prices much.
I’m Brett Neely for Marketplace.
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