Thursday, April 24, 2008

Recession?

Wow! Another day of sunshine and blue skies in Atlanta. We are grateful.

It's the topic of conversation - this supposed recession that seems to be upon us. Really? Yes, Ann Taylor and Bombay Company are out of business. That's not a function of recession, but a reflection of the competitive realities of a free enterprise system. The price of gas continues to set new records. That's not a recession, but domestic gasoline prices adjusting on a global basis to the value of the dollar.

It's the earnings reporting season on Wall Street, and the majority of the reports continue to be positive. Have people in America lost jobs? Of course. Again, this isn't a recession, just global competitive realities.

The classic definition of a recession is two consecutive quarters of declining Gross Domestic Product. The last time that happened was 1990-1991. Current surveys show declining consumer confidence. The only documentable correlation these survey results have with anything is the price of gasoline.

One of the best proxies for the health of the economy is Wal-Mart earnings. For the qaurter ended January 31, 2008, Wal-Mart reported revenue growth of 8.3%, while the year ended on this same date saw revenue growth of 8.6%. Income from continuing operations for the year ended 1/31/08 was up 5.8%.

It will be interesting to see the final numbers for GDP for the first and second quarters of 2008.

Until next time...

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