Most, if not all, major companies on Wall Street have already released their first-quarter earnings reports, with the profits of S&P 500 companies estimated to have dropped by 3.7 percent on average. (Related: Survey: 75% of people in Joe Biden's America believe the country's economy is GETTING WORSE.)
Based on data collected by Bloomberg Intelligence, 78 percent of American firms that released first-quarter earnings reports surpassed their forecasts. While this initially sounded good, Farah Elbahrawy of Bloomberg noted that this is less impressive than it sounds "given analysts had slashed their expectations before the season kicked off."
This is also the second straight quarter the earnings of corporate America declined.
Furthermore, forecasts for earnings for the second quarter of the year predict an average 7.3 percent slump in profits, thanks in no small part to the Federal Reserve's higher interest rates turning consumers away from spending and revitalizing the economy.
A similar decline in profits is expected during the third quarter of this year as well – a reversal of earlier predictions that earnings would recover by that time.
Economic experts have been warning of a recession for months now. But these same experts now believe the recession will come by the second half of 2023, and their warnings are now more dire following the first quarter earnings reports of corporate America.
JPMorgan Chase CEO Jamie Dimon warned on Thursday, May 11, that a "great economic danger" is lurking just over the horizon for the United States. Given this potential collapse of the American economy, he noted that he would "take a mild recession happily" than the worse alternative.
Billionaire investor Stan Drucnekmiller gave a similar warning during the opening of a conference. He cautioned that the American economy should expect a "hard landing," and "it's just naive not to be open-minded to something really, really bad happening."
Wells Fargo Head of Global Investment Strategy Paul Christopher noted that people should really start listening to recession prediction warnings because of two main reasons: higher interest rates and tightening credit.
The Fed has raised interest rates higher and quicker than they have in decades, and economic experts warn that this, as well as the ongoing crisis affecting the U.S. banking sector, are early warning signs of added stress on the American economic system.
Even the Fed's own experts admitted in March that the recent developments within the banking sector could cause "a mild recession starting later this year."
These bank failures are making borrowing, which has already become prohibitively too expensive due to the Fed's rate hikes, that much harder. Less borrowing means even more curbs on spending, and even less economic activity to keep the American economy afloat.
"The fallout in smaller businesses as banks lending is greatly reduced could also show in financial markets as overall business activity slows, and also it should impact the consumer," said Paul de la Baume, senior market strategist for Swiss investment bank FlowBank SA.
A survey by the Fed confirmed that lenders are already stiffening their standards on spending in the wake of the banking crisis, and demand for and supply of loans is now approaching levels not seen since the Great Recession.
"The bottom line for markets is that, with inflation still at five percent, well above the [Fed's] two percent inflation target, and the Fed not cutting rates anytime soon, credit conditions will continue to tighten and, as a result, a recession is coming that could be deeper or longer than the consensus currently expects," warned Torsten Slok, chief economist for private equity firm Apollo Global Management.
Learn more about the collapse of the American economy at EconomicRiot.com.
Watch this clip from Next News Network as anchor Gary Franchi reports on the worsening inflation crisis, and how this is doing little to ease fears of a devastating recession.