As Americans grow concerned that the U.S. economy could tip into a full-blown recession, one expert says evidence suggests that U.S. corporations will soon be hammered by a profit recession of their own as many have been unable to pass soaring input costs along to inflation-weary consumers and will have to scale back their earnings forecasts, pressuring stocks.
In a recent interview on the Wealthion program, MacroMavens founder and economist Stephanie Pomboy explained that a measure that she relies on as a proxy for corporate profit margins has plunged to lows not seen since the mid-1970s.
Pomboy said that this profit proxy gauge basically plots the difference over time between two separate inflation measures—the Consumer Price Index (CPI) and the Producer Price Index (PPI)—or consumer price inflation and business input cost inflation, respectively….