Posted on 05/31/2011 7:05:20 PM PDT by khnyny
To gaze upon the world of American corporations is to see a sunny place of terrific profits and princely bonuses. American businesses reported that third-quarter profits in 2010 rose at an annual rate of $1.659 trillion, the steepest annual surge since officials began tracking such matters 60 years ago. It was the seventh consecutive quarter in which corporate profits climbed.
Staring at such balance sheets, you might almost forget that much of the nation lives under slate-gray fiscal skies, a place of 9.4 percent unemployment and record levels of foreclosures and indebtedness.
And therein lies the enduring mystery of this Great Recession and Not So Great Recovery: Why have corporate profits (and that market thermometer, the Dow) spiked even as 15 million Americans remain mired in unemployment, a number without precedent since the Great Depression? Employment tends to lag a touch behind profit growth, but history offers few parallels to what is happening today.
“Usually the business cycle is a rising-and-falling, all-boats-together phenomenon,” noted J. Bradford DeLong, an economics professor at the University of California, Berkeley, and a deputy assistant secretary for economic policy in the Clinton Treasury Department. “It’s quite a puzzle when you have this disjunction between profits on the one hand and unemployment.”
A search for answers leads in several directions. The bulls’ explanation, heard with more frequency these days, has the virtue of being straightforward: corporate profits are the economy’s pressure cooker, building and building toward an explosive burst that will lead to much hiring next year.
The December jobs numbers suggest that that moment has yet to arrive, as the nation added just 103,000 jobs, or less than the number needed to keep pace with population growth. The leisure industry and hospitals accounted for 83,000 jobs; large corporations added a tiny fraction.
(Excerpt) Read more at nytimes.com ...
Worth the read. There are other articles from various sources which have basically gone under the radar saying the same thing...interesting how it is not being highlighted in the media.
Thanks to Obamanomics as it pertains to business, companies have been forced to live with less...Less sales/product volume translates to needing fewer/less employees which requires less overhead (paying them) = more profit.
Of course there are side effects...
He said , Bush taxes over in 2 years, no idea of health costs and no idea what unemployment cost or government regulations will cost a business under those conditions he would not put a penny in a new business because he uses a 5 year plan and under these conditions he can't.
Because of Obambi's policies. He simply can't pass a law requiring businesses to hire people.
It’s because business has gotten lean and mean, now a lot of folks a performing multidisciplinary work just to stay employed.
They laid off a lot of people and found out they can make a profit without them? So why hire them back?
Poor economic conditions may not seem a blessing in disguise but can you imagine the confiscatory and regulatory rampage by Obama during a time of plenty?
He’s an organ grinder with only one song to play entitled ‘Eat The Rich.’ It’s worked well for him as he’s Peter Principled his way up the political ladder but class warfare is the last thing anyone needs or wants to hear at this stage. It’s obvious the man doesn’t have a clue what to do or say next, such is the limit of his life experiences.
It’s from January
Article was better than I anticipated. Here’s one answer, “More so than in the past, many American-based corporations earn a great portion of their profits overseas.”
We're staffed where we need to be and will not hire until business actually breaks loose and we see a sufficient level of confidence in the market where our customers start to let go of their money. That just isn't happening yet. Everyone wants to believe that it is, but I'll believe when I actually see sales levels that are truly where they ought to be.
What’s the name of his restaurant chain?
Big corporations have no interest in helping the USA economy. They were once USA corporations with defacto USA citizenship and now have become international with no specific interest or loyalty in the USA.
The sooner we Americans understand that there is no longer a “corporate America” the clearer we can see why they sell us out.
Check the job growth in India and China for answers, Perfessor!
They’ll come up with every explanation but the real one: American workers are expensive and regulatory, tax and litigation uncertainty makes it worse.
Good answer. Unfortunately, that doesn’t help American workers.
In the past, obsolesence of consumer goods would lead to a spurt in consumer buying providing an uplift to the manufacturing sector and increased employment and an end to a recessionary cycle.We now live in a different world. That does not work anymore because the manufacturing sector is no longer the bulwark of our economy. That sector has disappeared overseas.
Bingo, we have a winner!
On purpose?
There is not one darn thing puzzling about this.
A: This almost always happens at the start of an inflationary cycle.
B: When you don't know how the gubment is going to screw you next you hold onto your money and DO NOT incur more costs.
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