As we near the end of the 90 day treadmill called corporate earnings, one theme stands out this quarter from a broad group of companies, both in size, geography, and area of practice.
Almost every company conference call we listened to and earnings report we read this quarter showed one very similar characteristic, slower sales growth (top line-wall street lingo) than management expected, but a good or better than expected profit (EPS/Bottom Line-again wall street lingo).
Ok, that is a little complicated; What does it mean?
Jobless rates may continue to rise and a new higher level of unemployment may be expected. (Historically 4% unemployment was generally perceived as a floor for full employment, this level may be higher moving forward.)
Companies and management are rapidly cutting costs. This recession, coming on the heels of recent technological improvements has focused most companies on increased cost cutting. (Read: Less employees to do the same job!)
Running parallel to our conclusion would be less job stability for all of us moving forward for the foreseeable future. We are certainly not saying run out and sharpen your resume, but it will be useful to fortify our personal balance sheets (increase emergency funds.)
Stay positive, but alert of surroundings. We feel strongly that things are getting better, slowly, but anything can happen.
Patience! JK