The Wall Street Journal published an article on July 15, titled “Tame Inflation Also Has Some Drawbacks,” that discusses various aspects of low inflation and its impact, including companies’ ability to raise prices and other aspects impacting corporate earnings and revenues.
An excerpt from the article :
While tame prices avoid spooking the Fed, freeing it to consider factors such as unemployment, they may be too subdued. Rising prices boost companies’ top lines and, ultimately, profits. That is needed to underpin stock gains. With margins already well above average, corporate revenue must start pulling its weight. As earnings season gets under way in earnest this week, it seems possible, though, that year-over-year revenue will be about flat. This would mark the third-consecutive quarter of ennui.
Nicholas Colas, chief market strategist at ConvergEx Group, dubs this a “revenue recession.”
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