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Why the stock market is outperforming the economy: Morning Brief

Tuesday, May 26, 2020

Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Corporate profits look better than expected, the economy looks worse than expected

During the early days of the coronavirus pandemic, economic and market forecasters were flying blind .

Accelerating numbers of confirmed COVID-19 cases along with sudden lockdowns around the globe made it impossible to estimate with any accuracy the kind of impact economies and businesses would see.

As preliminary March data — which captured the earliest impacts of these lockdowns — started to trickle in, forecasters were quick to slash their expectations. Economists predicted depression-like numbers and the financial market pros predicted earnings would crash .

Now, after two months and many economic and earnings reports later, two narratives have emerged: the U.S. economy as a whole is in worse shape than expected, and the profits of America’s biggest corporations are doing better than expected. The economy looks worse Following the releases of April economic numbers, including dismal jobs numbers and disastrous retail numbers , economists revised their forecasts even lower.On May 12, Goldman Sachs cut its GDP forecasts and while warning the unemployment rate would spike […]

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