On November 5, 2012, Rana Foroohar writes in the print edition of Time Magazine:
We’ve heard plenty about the wealth divide in the U.S. economy. But there’s another important divide–the one between consumers and corporations. If you look at how U.S. households have been behaving lately, you’d think it was all blue skies. Consumer confidence is at a five-year high, thanks to higher stock prices and a recovery in the housing market. Home prices have had their biggest jump since 2005. Consumers, finally feeling more flush, are buying that new car or electronic gadget and bolstering GDP growth a bit.
Part of the new confidence comes down to the fact that Americans have gotten their financial houses in order. Credit-card delinquencies are at a decade low, and mortgage debt is down, even if foreclosures still loom for some. Companies are even more flush: they’ve got $2 trillion on their balance sheets and record profits.
Yet far from being bullish, the blue chips are hunkering down as they see weakness down the road. Business spending has dropped, and hiring (which already wasn’t strong) is on hold at many companies. Exporters in particular are suffering because of a slowdown in emerging markets and continued problems in the euro zone. Even those that are doing well, like Caterpillar, have lowered earnings forecasts for 2012.
http://www.time.com/time/subscriber/article/0,33009,2127767,00.html
