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U.S. economy health check

As the third quarter #earningsseason is closing, their results can be broken down in different categories: those with pricing power, such as the magnificent seven, where earnings continue to grow at a healthy rate, the muddle middle set of companies, with a sluggish sales growth and some financial engineering, that can still present positive growth with adjusted earnings, cost cuts and other accounting alchemy tricks, and the ones that are losing money, those that don’t have fat to cut between slowing sales and the bottom line. As you can see below, 40% of the companies on the Russell 2000, the index representing the #smallcap universe, are losing money. There are 33M small businesses in the U.S., and they are responsible of around 50% of all the private sector #employment. And out of those, the companies that are selected as part of the index, supposedly the best ones, only 60% make money. If this situation continues, at what point do these companies start reducing headcount and start affecting unemployment?

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