Sales Fail to Keep Pace With Profits, a Sign U.S. Economy Remains Sluggish

[marmar]

Sales Fail to Keep Pace With Profits as Economy Stays Sluggish
By Peter J. Brennan and Steve Matthews


July 25 (Bloomberg) -- Sales growth lagged behind profits as companies in the Standard & Poors’ 500 Index beat analysts’ estimates this week, a signal that economic recovery may be slow.

Second-quarter revenue at Caterpillar Inc. and Freeport- McMoRan Copper & Gold Inc. tumbled more than 30 percent from a year earlier, though earnings topped the average of analysts’ predictions. Amazon.com Inc.’s profit skidded and sales missed estimates. United Parcel Service Inc.’s sales slid 17 percent. Microsoft Corp. saw annual sales drop for the first time in 23 years as a public company.

“The economy is coming back but it is not going to come roaring back,” said Mark Zandi, chief economist at Moody’s Economy.com. Companies “are going to be reluctant to add investment and jobs until they get better sales.”

....(snip)....

‘Double Dip’

Some economists fear a second economic contraction, what they call a “double dip.”

“Expectations of corporate earnings will have to be downgraded again,” Nouriel Roubini, the New York University economist who predicted the credit crisis, said in a July 23 research note. “Demand will be weak, most prices will be falling, and companies will therefore have little pricing power and their profit margins will remain squeezed. The expectation that in these conditions profits will rebound strongly is quite far-fetched.” ...........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a8SqhtHkyfL4

[Frustratedlady]

1. When companies come in line with reality on the pricing of children's clothes...

people will go back to buying off the rack.

We had a garage sale over the weekend and nearly cleaned out on children's clothes. About the only thing that didn't sell were the winter clothes.

It doesn't take that much material or labor to make many of the children's outfits. Their prices are outrageous and have been for many years.

[eilen]

2. I find clothing prices to be very low.

As there is no cotton fabric milled in this country anymore, in fact, most all cloth mills have closed in this country. We grow the cotton here but it is shipped to India, Sri Lanka and other global locales, then shipped back here in finished product. The prices for high quality cloth are due to shipping costs.

But, honestly, clothing is very low priced compared to what it was years ago when we milled our own cloth and our union brothers and sisters sewed the clothes. Of course the quality was much better but one could sew one's own for less. Now it seems it costs more to sew one's own but the quality is better when you do. Children's clothing takes just as long to sew as adult clothing-- the same amount of seams, just shorter. The construction (sewing time) is a small part of the actual job.

A lot of the price depends upon where you shop and if you shop clearance sales which belies the true cost. Shop off season. Right now is great to shop for next summer. Feb/March for the Fall.