This is the season of earnings reports – a three week period when US firms announce what can best be described as the “health check” of their firms with sales and revenue numbers released as well as spending for new businesses and much more. Since the 2008 Great Recession the US firms have enjoyed cheap capital and more recently tax cuts, allowing them to expand and enjoy the benefits of a decade long economic expansion. But this first quarter of 2019 was expected see a sudden slowdown in the US corporate sales and earnings numbers – in short the beginning of the corporate spending and investment slowdown as the global economy fades.
However, the releases by Amazon, were strong as were 78% of the S&P 500 companies that reported in the past two weeks which means the earnings season that was to be shockingly weak is in fact stronger than many expected.
Amazon saw its revenue increase 16.9% in total compared to a year ago, representing the slowest expansion since 2015. Its cloud service grew by 41% in terms of sales.
Starbucks also beat its earnings forecasts, revenue $6.31 billion with a 3 percent sales increase in the US and China in sales. This firms continues to expand in Asia outside of China with an expansion of 2 percent. Overall US firms continue to show growth and the ability to adjust to a changing economy. The economic expansion that was discussed in January and February with the expected US and China slowdown is not taking place. The expectations of lower GDP and lower corporate activity will now be put aside for faster growth and a healthy profits for US firms.