The stock market expects the future to be less profitable. Market is down big time this week.
Oil closed above $140. High oil & gasoline prices will probably be a strain for some time [3-6 months +]. Not seeing $1.999 gas any time soon. The station here in town has regular 87 up to $4.199 [6/27/08]. This was a jump of 20 cents from yesterday [the price had fallen 6 cents in the previous 24 hours].
Taxes look to be going higher not lower.
Unemployment is 5.5%. It jumped .5% as the most recent move. Will probably increase for the rest of the year. It may hold steady for a month or two but the trend is for higher unemployment to close out the year. Prediction is 5.9% - 6.1% unemployment to close out the year.
What else may happen...
- Firms will have lower profits in the second half.
- Shareholders will demand that management fix it.
- Management will cut costs [add more technology and reduce payroll].
- This will increase productivity and should help margins a bit.
- The folks who are unhired will have trouble finding replacement income.
- Consumer spending will drop.
- Sales and profits will fall.