A trader works on the floor of the New York Stock Exchange in New York City on Aug. 5. The majority of America's top companies have reported strong earnings, but warning signs about the economy are also emerging from their corporate earnings.
It's a remarkable show of strength given they had to navigate a challenging economic environment — a time when the country was dealing with its highest inflation in around 40 years and the Federal Reserve was hiking interest rates. Historically, when companies are anxious about the future, they cut their ad budgets, making it a leading indicator about how companies view the economy.Social media companies have seen ad sales slow, and that dragged down their earnings. In the second quarter, Meta, Facebook's parent company, saw its revenue fallA sign in displayed in front of Meta headquarters in Menlo Park, Calif., on Feb. 2. Meta, Facebook's parent company, reported a 1% decline in revenue in the most recent quarter.
The company added that it expects"these challenges to continue in the near term as economic concerns pressure markets worldwide."As office workers know already, when companies start cutting costs or putting expansion plans on hold, it often means they see potential trouble ahead.Some companies are also slowing hiring, or even starting to announce job cuts, even if the latest economic data shows the overall labor market remains healthy.
She also added GM has"modeled several downturn scenarios, and we are prepared to take more deliberate action when and if necessary."people have continued to spendBut companies say they are seeing evidence of changes in what people are buying, and that's contributing to a glut of unsold inventory.