America Inc’s profits are under pressure
America Inc reports
CEO confidence declined to its lowest level in a decade
DESPITE A GOOD run of profits and the longest economic expansion in history, the mood in corporate America is darkening. The latest survey of bosses’ confidence is plunging. That gloom is reflected in forecasts for the third-quarter earnings season, which is now under way. While the median firm will still see rising profits, earnings per share for the S&P 500 index are expected to fall when compared with the previous year, dragged down by a small number of Goliaths (such as Apple, Exxon and Boeing). Companies continue to splash out on share buybacks, though less zealously than last year. Since 2017 firms that favour buybacks have outperformed the index, according to analysis by Goldman Sachs. But those that used their cash on mergers and acquisitions did even better. Discouragingly, those that ploughed money into capital expenditure and R&D, which are necessary to boost long-term growth, fared far worse.