FORTUNE — Here’s a switch: The bankers are all of a sudden doing worse than the butchers, the bakers, and the candlestick makers.
On Wednesday, Bank of America (BAC) announced that it had lost nearly $300 million in the first quarter. Analysts were expecting the bank to turn a profit. A year ago, it earned $1.5 billion. Meanwhile, profits at meat company Tyson Foods (TSN) are predicted to have jumped 130% in the first three months of the year. The bottom line at The Cheesecake Factory (CAKE) likely rose as well. Jarden (JAH), which bought Yankee Candle Co. last year, made $19 million in the first quarter. Last year, it lost a little over $4 million.
One of the themes of the recent recovery has been how Wall Street and banks in general have done much better in the rebound than the rest of us. A big justification for the financial crisis bailouts was that the banks were going to lead us out of the recession. Instead, they just seemed to go ahead on their own.
Last year, stocks rose 30%, even as the economy continued to disappoint. When the Dow Jones industrial average (INDU) hit an all-time high in the middle of the year, many quipped that the well-known stock average was meaningless. The split led many to point out the growing difference between the real economy and the money economy, though it’s probably true that the two were more linked than people suggested.
Now, though, the real economy appears to be catching up, and perhaps taking the lead. Stocks have barely budged this year. And bank earnings, battered by a drop in mortgage refinance activity and a flat stock market, have mostly been a bust. What’s more, higher interest rates, which could make borrowers more reluctant to take out loans, could crimp bank profits for the foreseeable future.
Along with Bank of America, JPMorgan Chase (JPM) missed earnings estimates, and its bottom line was down 20% from a year ago. Profits at U.S. Bancorp (USB) also fell 2% in the first quarter. On Thursday, Goldman Sachs (GS) reported earnings that were better than expected, but still down 5% from a year ago.
Earnings in the first quarter were lackluster in general. But banks have come out the worst, with bottom lines dropping nearly 14%. That’s far worse than an average earnings drop of less than 1% for all the non-financial companies in the S&P 500 (SPX).
“It wasn’t an encouraging quarter if you’re looking for evidence that the economy is picking up,” Raymond James bank analyst Anthony Polini told CNNMoney.com.
And yet, elsewhere, there seems to be plenty of evidence that the real economy is improving. Employers added nearly 200,000 new workers to their payrolls in both February and March. Earlier this week, industrial production numbers were better than expected, and retail sales were up. “It’s clear that the economy is picking up steam,” says Paul Ashworth, the chief U.S. economist for Capital Economics.
While news that industries outside of finance are doing better than banks and bankers may seem like a reason to celebrate for some, it may not be all that much to cheer about in the end. Some have argued that the recovery has been slow because the needed resources to repair the banking sector have sucked money out of the rest of the economy. The idea is that banks facing stricter rules and greater scrutiny have become hoarders. But now that we are seeing improvements beyond the banks and Wall Street, the hope is that the benefits of the economic recovery will be more widely shared.
But that can only go so far. The real economy needs the money economy to continue to do better, and vice versa. In fact, some suggest what we are seeing now has very little to do with the health of the real economy. “The money economy is falling back, but I don’t think that means the real economy is doing better,” says market strategist James Bianco. “The numbers we’re getting are still pretty consistent with a crappy economy.”