Oct 10, 2019

A perfect economy, but far from a perfect earnings season

Powell attends an event at the Federal Reserve on October 4, 2019. Photo: Win McNamee/Getty Images

We're in a Goldilocks economy, if you believe Fed chair Jay Powell. He gave a speech on Tuesday to the National Association for Business Economics in which he reminded the attendees just how special the current economic situation is.

"We don’t get to see the 11th year of an expansion a lot, and there’s a lot to like about it, particularly for people at the lower end of the wage scale who are getting now the highest raises. And it’d be great to continue."
— Jay Powell
Expand chart
Data: U.S. Chamber of Commerce; Chart: Axios Visuals

What he's saying: Powell was upbeat about his interest rate cuts, which he said were designed to give the economy room to "gather steam again." He was also optimistic on inflation, and said he was trying very hard to persuade the markets that he wants to see it higher.

  • Powell barely needed to mention unemployment, which is at a 50-year low. There are now just 1.04 Americans looking for work for every job vacancy in America, according to new data from the U.S. Chamber of Commerce. That's an all-time low and bespeaks a very healthy labor market.

Yes, but: Next week is the official start of earnings season. Major banks will report their 3rd quarter results, including JPMorgan, Wells Fargo and Goldman Sachs. Look out for United Airlines and J&J too.

Expand chart
Data: FactSet; Chart: Axios Visuals

Why it matters: Expectations are low. Analysts expect S&P companies' third-quarter earnings to come in 4% lower than the same period last year. That would mark the biggest year-over-year drop since 2016, according to FactSet.

  • Companies have been guiding investors' expectations downward in the wake of uncertainty about the trade war, higher tariff-related costs and concerns about the global economy. What's certain is that earnings won't come close to the expectations that the market priced in last year.

Go deeper: The world according to Jerome Powell

Go deeper

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 3 a.m. ET: 5,410,228 — Total deaths: 345,105 — Total recoveries — 2,169,005Map.
  2. U.S.: Total confirmed cases as of 3 a.m. ET: 1,643,499 — Total deaths: 97,722 — Total recoveries: 366,736 — Total tested: 14,163,915Map.
  3. World: White House announces travel restrictions on Brazil, coronavirus hotspot in Southern Hemisphere Over 100 coronavirus cases in Germany tied to single day of church services — Boris Johnson backs top aide amid reports that he broke U.K. lockdown while exhibiting symptoms.
  4. Public health: Officials are urging Americans to wear masks headed into Memorial Day weekend Report finds "little evidence" coronavirus under control in most statesHurricanes, wildfires, the flu could strain COVID-19 response
  5. Economy: White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Public employees brace for layoffs.
  6. Federal government: Trump attacks a Columbia University study that suggests earlier lockdown could have saved 36,000 American lives.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 3 hours ago - Politics & Policy

U.S. coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios. This graphic includes "probable deaths" that New York City began reporting on April 14.

The CDC is warning of potentially "aggressive rodent behavior" amid a rise in reports of rat activity in several areas, as the animals search further for food while Americans stay home more during the coronavirus pandemic.

By the numbers: More than 97,700 people have died from COVID-19 and over 1.6 million have tested positive in the U.S. Over 366,700 Americans have recovered and more than 14.1 million tests have been conducted.

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

Japan's economy minister outlined plans on Monday to end the nationwide state of emergency as the number of new novel coronavirus cases continues to decline to fewer than 50 a day, per Bloomberg. Japan has reported 16,550 cases and 820 deaths.

By the numbers: Over 5.4 million people have tested positive for the virus as of Monday, and more than 2.1 million have recovered. The U.S. has reported the most cases in the world (over 1.6 million from 13.7 million tests). The U.K. is reporting over 36,800 deaths from the coronavirus — the most fatalities outside the U.S.