Earnings reports: Major companies could help move economy

People aren't spending money like they used to. Unemployment is still flirting with double digits. And the housing market is still shaky. So the future looks bleak for the economy, right? Not necessarily.

A handful of surprisingly good earnings reports yesterday suggested that some of the major U.S. companies that make things and move them around - including Caterpillar, 3M and UPS - could lead the way to an economic recovery.

Peter Buchanan, a senior economist at CIBC World Markets, said executives have taken pains lately not to raise hopes too high for big profits in future quarters. That spread fear among investors that the economy might stall. But he says recent earnings results should help ease such worries.

"If you're moving stuff, it's a broad indicator covering spending by both businesses and consumers," Buchanan says.

Still, two government reports Thursday sent a reminder that the weak housing and job markets are making it hard for the recovery to take flight.

Sales of previously occupied homes fell 5.1 percent in June, according to the National Association of Realtors, to a seasonally adjusted annual rate of 5.37 million. And new claims for unemployment aid jumped last week by 37,000, to a seasonally adjusted 464,000. Analysts expected a smaller rise, according to a Thomson Reuters survey.

Separately, the Conference Board, a private research group, reported Thursday that its gauge of future economic activity dropped in June, the second decline in three months.

The index of leading economic indicators declined 0.2 percent in June, following an upwardly revised increase of 0.5 percent in May, according to MarketWatch.