Today we’ve got some good news and some bad news. The good news is that corporate earnings are up. The bad news is that it’s not because business is improving:
In an ominous sign for the economy, much of the profit is being eked out through cost cuts. Executives say they are hesitant to reinvest such profits into their businesses. With large portions of their factories, fleets and warehouses sitting idle, some say they probably won’t see reason to do so for a year or more.
….Already, the economy is being starved of investment it needs to spark growth. Net private investment, which includes spending on everything from machine tools to new houses, minus depreciation, fell to 0.1% of gross domestic product in the second quarter of 2009, according to the latest government data. That’s the lowest level since at least 1947.
And that’s even with a massive stimulus, interest rates near zero, and trillions of dollars in Fed support. Count your blessings, such as they are.