What Irma & Harvey did to our economy & investments - Earnings Season update:
Bottom Line: It's safe to say that the hurricanes definitely wrecked our earnings mojo. Though the 2nd quarter earnings season companies posted record profits which helped support record stock prices, record dividends and improving wages for employees. Then Harvey and Irma happened. Prior to both hurricanes the average earnings estimates were for profit growth of near 9% for the 3rd quarter. At the end of September after the hurricanes that dampened to 3% growth. And after the 2nd full week of the 3rd quarter earnings season here's the latest:
With 17% of companies reporting:
20% experienced a negative impact from one or both of the hurricanes
The average earnings growth rate stands at 1.7% year over year
So, a couple of notes. Only 17% had reported as of this information - so there's room for improvement overall (though the opposite is also true). Any year over year growth is somewhat impressive given the strike of two major hurricanes in the same quarter hitting two of the three largest states directly. Most companies citing hurricane impact have said business has resumed well after the hurricanes. That's critically important going forward for stock prices, dividends, earnings but also for the economy.
It remains to be seen what the third quarter growth rate was, we'll find out soon, but it's all but certain that the hurricanes did away with our chance to sustain the 3%+ growth we had in the second quarter. The question is if we can pick up where we left off and get it back for the 4th quarter of the year and build momentum towards 3%+ sustained growth entering 2018. More to come.