The United States economy has been the lone bright spot in the global landscape as the rest of the world has dealt with a harsh economic environment. Despite the overall positive outlook of the United States, companies in the United States are not performing as well as expected. The difference in performance highlights both the growing globalization of our marketplace and the disconnect between Wall Street and Main Street.

 

The United States’ strong performance relative to the rest of the world has been a result of the Federal Reserve’s aggressive quantitative easing policy. The government has held the economy up in the hopes that down the line companies will be healthy enough to support themselves.

 

In actuality, the business environment in the United States is not as strong as it seems. Earnings from U.S. companies are set to be the lowest since 2009. The poor performance is due to the drop in commodity prices and the uncertainty around when the Federal Reserve will raise interest rates. As the unemployment rate continues to drop and inflation rises, the corporate environment should improve.

 

 

Investors should be wary of the current environment. Although companies are recording low profits, stock prices are sky high. The inflated market place is creating a potentially massive stock bubble, which could crush the average investor. Stock prices cannot be supported by companies not actually reporting any revenue. Business can only run on potential for so long before it needs cash to back it up.

 

The United States economy has escaped the financial crisis and managed to retain its spot as the dominant force in global trade; however, in order to remain the most powerful nation in the world, the United States must keep learning to adapt.

 

Should a weak earning season leave investors worried? Will the U.S. continue to be the world’s strongest economy even as corporations struggle? Feel free to leave a comment or find me on Twitter @Andrew_Morse4