Tags: 3M, Apple Inc., Consumer Confidence, Corporate Profits, Economic Recovery, Ford, Goldman Sachs, JPMorgan Chase, U.S. Economy

We Want to Hear From You: Do You Think Booming Corporate Profits Are the Sign of a Strengthening U.S. Economy?

By , Associate Editor, Money Morning •

The past few weeks have pulled in one earnings report after another for 2010's first quarter, allowing a better look at the status of corporate profits. Most companies hoped for marked improvements after restructuring and cutting costs in the wake of the financial meltdown that gave balance sheets a beating.

And they weren't disappointed:

  • JPMorgan Chase & Co. (NYSE: JPM) raked in $3.33 billion in first-quarter net income.
  • Ford Motor Co. (NYSE: F) beat analysts' estimates with a $2.1 billion profit.
  • Apple Inc (Nasdaq: AAPL) - now enjoying its iPad release - reached $3.38 billion.
  • 3M Company (NYSE: MMM) rose 80% to $930 million.
  • And the headlining Goldman Sachs Group, Inc. (NYSE: GS) doubled its profit to $3.46 billion.

"There is clear and broad-based improvement in the economic factors in the United States and around the world," said JPMorgan Chief Executive Officer Jamie Dimon. "It appears to be strengthening, not weakening. It is possible that they will strengthen enough to end up with a strong recovery."

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The Conference Board's U.S. consumer confidence index in April hit its highest level since September 2008, rising to 57.9. The number of consumers saying business conditions are "bad" fell to 40.2% from 42.1%.

But there's a bigger story behind these numbers that has analysts cautious to use the word "recovery." Year-ago comparisons can be misleading in that 2008 was a rough year across the board, and companies have since drastically cut costs to turn a profit. With unemployment still at 9.7%, companies continue to face a financially weak consumer base.

"We continue to operate in an uncertain environment," Family Dollar Stores Inc. (NYSE: FDO) Chairman and Chief Executive Officer Howard R. Levine told analysts on April 7. "While economic conditions appear to be stabilizing it is unclear whether we will see sustainable improvement."

That brings us to next week's Money Morning Question of the Week: Do you think booming corporate profits are the sign of a strengthening U.S. economy? Can these billion-dollar earnings be sustained for the rest of 2010? Or are these first-quarter numbers too good to be true?

Send your thoughts, questions and concerns to [email protected].

[Editor's Note: Is there a topic you want to see covered as a "Question of the Week" feature? Then let us know by e-mailing Money Morning at [email protected]. Make sure to reference "question of the week suggestion" in the subject line.

We reserve the right to edit responses for length, grammar and clarity.

Thanks to everyone who took the time to participate - via e-mail or by posting their comments directly on the Money Morning Web site.]

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