Investors pin hope on everyday basic goods

Investors are looking for glimmers of economic hope in the everyday basics, from cereal to pens to cleaning supplies. Consumers worried about jobs and tight credit have not only cut back on big-ticket items such as sofas but also scaled back on the daily necessities. They are buying less and switching to lower-priced store brands. This week's second-quarter earnings reports include results from companies that directly or indirectly serve the consumer, including Colgate-Palmolive; Sealed Air, the maker of Bubble Wrap; Dow Chemical, which makes base products for a wide array of everyday items; and Newell Rubbermaid, manufacturer of office supplies, tools and cleaning and home storage items. They should serve as barometers of how much Americans are willing to spend and, because consumer spending accounts for more than two-thirds of economic growth, shed some light on the timing of a recovery. Results at Colgate-Palmolive, known for its namesake toothpaste and dish soap, and cereal maker Kellogg should reveal whether shoppers are still cleaning out their cupboards of food and household products before buying any new items. If consumers are starting to stockpile again, that could show they are feeling more confident about their financial security. At family entertainment powerhouse Walt Disney, analysts will be watching for signs that more people are going to the movies, buying toys and visiting theme parks. Here is a look at some of these purveyors of products that affect consumers' everyday lives and what their earnings might tell us: The Walt Disney The family entertainment conglomerate, which owns the Disney movie studio and theme parks, as well as ABC, ESPN and the Disney Channel, is a yardstick for the health of many businesses that rely on consumer spending: movies, theme parks, toys and advertising. On average, analysts polled by Thomson Reuters expect Disney to post a profit of 50 cents per share on revenue of $8.82 billion (Dh32.35bn). In the same quarter of last year, the company reported a profit from continuing operations of 62 cents per share on revenue of $9.24bn. - You will know the economy is improving if: Disney beats profit expectations. Also, if the company doesn't announce more job cuts, it may be a sign the economy has hit bottom. - You will know the economy is not improving if: Advertising revenue declines further than expected, signaling that businesses are still wary about spending money. Ad sales are expected to be down 10 per cent for broadcaster ABC and off in the single-digits at ESPN. Newell Rubbermaid The consumer products company makes everything from power tools to pens, which means millions of shoppers browse Newell Rubbermaid brands including Rubbermaid, Papermate and Graco. Like many competitors, Newell Rubbermaid has seen cost-conscious customers delay purchases or trade down to cheaper, generic brands. - You will know the economy is improving if: Consumers buy more of the company's office supplies, tools and cleaning items than they did in the first quarter, when sales fell 16 per cent. Analysts aren't expecting sales to rise from their levels of a year ago, but a "less bad" decrease would show that shoppers aren't delaying purchases for non-essential items as they have been doing. - You'll know the economy is not improving if: There's a large decrease in sales compared to the first quarter. That's a sign shoppers still aren't opening their wallets unless they have to. Kellogg Company The recession has generally helped the world's largest cereal maker as people began eating cheaper meals at home to save money. That has allowed Kellogg to make price increases stick even as ingredient costs eased somewhat. Cheerios maker General Mills posted a big profit earlier this month. - You will know the economy is improving if: Strangely, a decline in cereal sales might point to some economic improvement, because it could mean consumers are going back to more expensive meals. - You will know the economy is not improving if: Kellogg has had to cut prices on cereal to maintain sales. That could be a sign consumers are watching their spending even more. Colgate-Palmolive Colgate makes well-known consumer products, that, along with its namesake brands, include Ajax cleaner and Irish Spring soap. Although the company has kept firm on prices, its business has suffered little from consumers trading down to cheaper products. - You will know the economy is improving if: Consumers keep lining up to pay full price for Colgate's products. With so many Americans watching their spending, their willingness to pay more for Colgate's brand-name products might indicate an improvement in consumer spending. - You'll know the economy is not improving if: Consumers empty their pantries before heading to the store to buy more Colgate products. If consumers are using up what they already in hand have before buying more, it likely means they're still be strapped for cash. Dow Chemical Co Dow is the nation's la