Some sceptics of the recent economic recovery have blown-off rising corporate profits by blaming cost-cutting efforts and saying that sales growth has been nonexistent.
Well today’s inventory data kills that idea. As shown below, on both a seasonally-adjusted and raw non-seasonally-adjusted basis, sales in July were 9.2% and 8.0% higher respectively.
Sales growth is indeed happening, and when the S&P 500 is at just 1,120 you can’t ask for better than 8-9% growth, which is decent. Thus profits growth won’t just be about cost-cutting when Q3 earnings come out.
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