Widespread earnings woes reflect consumer fears

NEW YORK (Reuters) - The deepening plight of the American consumer has started to take a big bite out of corporate earnings.

A number of major U.S. companies who rely on consumer spending warned about their results on Monday evening, including credit card company American Express Co, Macintosh computer and iPod maker Apple Inc and cruise ship operator Royal Caribbean Cruises Ltd.

The breadth of the warnings, which also came from makers of chips and carpets, may signal that the credit crisis is quickly moving beyond housing and banks and into mainstream Corporate America.

"It's understandable that the U.S. consumer would be apprehensive with the circumstances -- weakness in housing, gasoline is up, the stock market is down and job insecurity," said Brian Gendreau, an investment strategist in New York for ING Investment Management Americas. "We may actually have a consumer-led recession -- which is rare."

The wrath of the credit crunch and housing collapse of the past year has largely been felt by middle- or lower-income people. But Monday's results reflected a broadening of fears.

American Express executives said that even customers with solid credit scores were facing difficulties and even the very affluent have in some cases cut back discretionary spending.

Monday's bad news came from a wide swath of sectors and raised concerns about how strong two of the major consumer events will be this year -- back-to-school season and year-end holiday spending.

"If you look at energy prices and things like that, it's not any big surprise the consumer has been cautious," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto. "It's a splash of cold water on the theory that earnings will bounce back quickly."

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