American Companies post record profits during a "bad" economy!

This article just came out on yahoo. http://finance.yahoo.com/news/Corporate-Profits-Were-the-nytimes-3994329548.html?x=0&.v=1

Here is an excerpt from the first couple paragraphs.

The nation's workers may be struggling, but American companies just had their best quarter ever.

American businesses earned profits at an annual rate of $1.66 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or non-inflation-adjusted terms.

Corporate profits have been going gangbusters for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history.

This breakneck pace can be partly attributed to strong productivity growth - which means companies have been able to make more with less - as well as the fact that some of the profits of American companies come from abroad. Economic conditions in the United States may still be sluggish, but many emerging markets like India and China are expanding rapidly.

Tuesday's Commerce Department report also showed that the nation's output grew at a slightly faster pace than originally estimated last quarter. Its growth rate, of 2.5 percent a year in inflation-adjusted terms, is higher than the initial estimate of 2 percent. The economy grew at 1.7 percent annual rate in the second quarter.

Still, most economists say the current growth rate is far too slow to recover the considerable ground lost during the recession.

It is absolutely disgusting that corporations are amassing record profits while complaining about things such as corporate taxes being to high or how unions are damaging companies.

In the meantime while these corporations sit on huge cash reserves and reach record profits our national debt increases, the economy stinks, and huge portions of our population are out of work.

*checks Australia's 2009 GDP estimate*
Your companies posted profits higher than 150% of my nation's entire GDP? That's fucking ridiculous.

The Great Googly:
-snip-

Just a slight thing, it might be better to stick the info you pull from a site inside a quote box instead of italicising it. Such a huge amount of italicised text looks bloody horrible.

Steppin Razor:
*checks Australia's 2009 GDP estimate*
Your companies posted profits higher than 150% of my nation's entire GDP? That's fucking ridiculous.

The Great Googly:
-snip-

Just a slight thing, it might be better to stick the info you pull from a site inside a quote box instead of italicising it. Such a huge amount of italicised text looks bloody horrible.

Yeah the profits were insanely large. Yet these companies demand lower corporate tax rates while our national debt becomes worse and we are forced to gut the government budget by cutting services or adding taxes which affect citizens more and more.

Also good suggestion on the quote box thing. Done.

It's amazing how companies continue to post record profits without any significant increase of American consumer activity. It's actually pretty disturbing.

Something that might be incredibly misleading is the fact that a lot of these "American" companies actually have a lot of their revenue stream coming outside the country. How much of those profits are generated in the US and are going to be invested in the US?
As for the productivity growth, that's expected during a tight labor market. People work their asses off because they can be easily replaced.
On another hand, if American companies can't make shit-loads of money from a massive zero interest loan dished out by the feds, then they shouldn't be doing business.

Ok. Pay me more. If you're experiencing record profits, you can afford to give me a wage that I can live off of.

Worse than any average company are the bailed out companies (Goldmann Sachs) who earn record profits and their CEOs get record bonuses. Like they fucking deserve a bonus after running the company into the ground... Not to mention a government handout which they just pocket. Not only do they pocket it but they take this money at 0% interest and then loan it back to the government at I think 3% interest? Pure profit. Disgusting.

You forgot to post the last part of the article. I'll just toss this here in case somebody doesn't click the link and starts going off half cocked.

Still, most economists say the current growth rate is far too slow to recover the considerable ground lost during the recession.

The economy is not growing fast enough to reduce significantly the unemployment rate or to prevent a slide into deflation, Paul Dales, a United States economist for Capital Economics, wrote in a note to clients. This is unlikely to change in 2011 or 2012.

The increase in output in the third quarter was driven primarily by stronger consumer spending. Wages and salaries also rose in the third quarter, which might help bolster holiday spending in the final months of 2010.

Private inventory investment, nonresidential fixed investment, exports and federal government also contributed to higher output. These sources of growth were partially offset by a rise in imports, which are subtracted from the total output numbers the government calculates, and a decline in housing and other residential fixed investments

Um, why did we bail businesses out again?

So, how 'bout them trickle-down economics?

Relevant: the US dollar is currently devalued. "Record profits" might just mean it takes more American dollars to make up the amount of foreign currency coming in, which would make it an artificially inflated statistic.

Does anybody else feel dooped? I don't mean the dooped everyone is talking about but dooped in general. Basically Enron all over again. Making their companies look more profitable by doing something that is illegal or should be illegal. Something that will get reported on... right as stock hits a low again and we double dip. At that point i hope that we can finally do some major major reform or at least not have unemployment double.

dmase:
Does anybody else feel dooped

You mean duped? =P

Hehe.Dooped.

And yet this information (which isnt anything new, they were posting record profits back when people where literally crying about the economic problems) will go largely ignored by conservatives who will continue to say that the rich need more money and somehow that will benefit the poor... which, as EVERYONE knows, hasnt worked and will never work because they are GREEDY!!! Thats what capitalism teaches you to be, and thats how you become CEO of a huge corporation!

You dont get many liberals at the head of a corporation.

How long have they been pushing this trickle down economics bull and yet while the rich are getting richer because of these tax cuts and such, the poor continue to get poorer. Its just ridiculous, complete and utter bullshit.

Trickle down baby! All over my face!

Kinguendo:
And yet this information (which isnt anything new, they were posting record profits back when people where literally crying about the economic problems) will go largely ignored by conservatives who will continue to say that the rich need more money and somehow that will benefit the poor... which, as EVERYONE knows, hasnt worked and will never work because they are GREEDY!!! Thats what capitalism teaches you to be, and thats how you become CEO of a huge corporation!

You dont get many liberals at the head of a corporation.

How long have they been pushing this trickle down economics bull and yet while the rich are getting richer because of these tax cuts and such, the poor continue to get poorer. Its just ridiculous, complete and utter bullshit.

But the rich are what give us jobs! If only they had even more money, they could afford to hire everybody! They aren't using the money that they have now because of, umm, taxes and regulation. And they need some income security. Yeah, that's the ticket. They need those billions of dollars in order to fall back on. So if they had even more money, they'd hire people just because, you know, they can. Because giving someone a job is really like giving them something and not like taking advantage of their situation in order to make a profit from their labor. It's a noble, unselfish act, this giving of jobs. Say 'thank you' to your exploiter, and make sure the government doesn't take any of his precious profits, or else you might just have to go without food for awhile.

The Great Googly:
This article just came out on yahoo. http://finance.yahoo.com/news/Corporate-Profits-Were-the-nytimes-3994329548.html?x=0&.v=1

Here is an excerpt from the first couple paragraphs.

The nation's workers may be struggling, but American companies just had their best quarter ever.

American businesses earned profits at an annual rate of $1.66 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or non-inflation-adjusted terms.

Corporate profits have been going gangbusters for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history.

This breakneck pace can be partly attributed to strong productivity growth - which means companies have been able to make more with less - as well as the fact that some of the profits of American companies come from abroad. Economic conditions in the United States may still be sluggish, but many emerging markets like India and China are expanding rapidly.

Tuesday's Commerce Department report also showed that the nation's output grew at a slightly faster pace than originally estimated last quarter. Its growth rate, of 2.5 percent a year in inflation-adjusted terms, is higher than the initial estimate of 2 percent. The economy grew at 1.7 percent annual rate in the second quarter.

Still, most economists say the current growth rate is far too slow to recover the considerable ground lost during the recession.

It is absolutely disgusting that corporations are amassing record profits while complaining about things such as corporate taxes being to high or how unions are damaging companies.

In the meantime while these corporations sit on huge cash reserves and reach record profits our national debt increases, the economy stinks, and huge portions of our population are out of work.

You would rather they lay off workers due to poor profits ? This just goes to show that the socialist model of punishing profitability has simply not worked. Profitable companies are a sign of a strong economy, where employment growth will shortly follow.

Capitalism at it's finest.

MaxwellSmart:

You would rather they lay off workers due to poor profits?

Why is that the only other option?

Knight Templar:

MaxwellSmart:

You would rather they lay off workers due to poor profits?

Why is that the only other option?

Because usually companies which do not generate a profit do not stay in business very long and therefore do not employ people for very long either ?

MaxwellSmart:

Knight Templar:

MaxwellSmart:

You would rather they lay off workers due to poor profits?

Why is that the only other option?

Because usually companies which do not generate a profit do not stay in business very long and therefore do not employ people for very long either ?

So they can only generate record profits, complaining all the while, or go out of business?
You don't see any other possiblity?

Knight Templar:

MaxwellSmart:

Knight Templar:

Why is that the only other option?

Because usually companies which do not generate a profit do not stay in business very long and therefore do not employ people for very long either ?

So they can only generate record profits, complaining all the while, or go out of business?
You don't see any other possiblity?

I believe that people should be rewarded for working hard. Profit is not evil, it is the life blood of prosperity.

MaxwellSmart:

Knight Templar:

So they can only generate record profits, complaining all the while, or go out of business?
You don't see any other possiblity?

I believe that people should be rewarded for working hard. Profit is not evil, it is the life blood of prosperity.

That does not answer my question.

Huge post-recession jumps in profits could be expected.

Firstly, there's usually quite a bounce back after recession before growth stabilisation; people are liable to spend less during a period of fear even if their income isn't affected, just in case of trouble. Consequently, they will readily spend what was not spent earlier when confidence returns.

Secondly, bear in mind all these companies, due to the recession, will have gone on major efficiency drives, and cut back as much as they can. Thus when the economy picks up again they'll have a recession-size expenditure with non-recession size income. As people spend more throughout the recovery, they'll fatten up again.

MaxwellSmart:

I believe that people should be rewarded for working hard. Profit is not evil, it is the life blood of prosperity.

Too much money in too few hands is not prosperity, unless you are one of the few. And i'm a conservative here.

aPod:

MaxwellSmart:

I believe that people should be rewarded for working hard. Profit is not evil, it is the life blood of prosperity.

Too much money in too few hands is not prosperity, unless you are one of the few. And i'm a conservative here.

Once companies start to generate profits again, they will start employing people, this will be putting money in people's hands.

If you force companies to 'share' all you do is advantage one group of poor people to the disadvantage of the other group.

Things should go to those who are best at competing for them. Not those who get hand outs.

MaxwellSmart:

aPod:

MaxwellSmart:

I believe that people should be rewarded for working hard. Profit is not evil, it is the life blood of prosperity.

Too much money in too few hands is not prosperity, unless you are one of the few. And i'm a conservative here.

Once companies start to generate profits again, they will start employing people, this will be putting money in people's hands.

If you force companies to 'share' all you do is advantage one group of poor people to the disadvantage of the other group.

Things should go to those who are best at competing for them. Not those who get hand outs.

So you would expect this quarters job's numbers to have a massive increase to go along with the record breaking profit generated by last quarter?

They won't hire until a critical mass of demand is reached when compared to the current labour forces ability to meet that demand. Right now they've shown that they can meet demand that is not all that much lower than the mid 2000's without anywhere near as many workers and will be loathe to hire any more than is absolutely necessary not due to wanting simple profits but due to wanting profit "growth" above that of inflation and above pre crash levels which have been taken as a new baseline.

TheGuy(wantstobe):

So you would expect this quarters job's numbers to have a massive increase to go along with the record breaking profit generated by last quarter?

They won't hire until a critical mass of demand is reached when compared to the current labour forces ability to meet that demand. Right now they've shown that they can meet demand that is not all that much lower than the mid 2000's without anywhere near as many workers and will be loathe to hire any more than is absolutely necessary not due to wanting simple profits but due to wanting profit "growth" above that of inflation and above pre crash levels which have been taken as a new baseline.

Maybe so.

I think what will hold down employment most is economic uncertainty. There are still mild tremors and national bailouts in Europe, weak growth in the West and lingering fear of a "double dip". Until confidence grows, it's hard to imagine companies expanding their workforce (and hence their expenses) significantly.

That does bring into focus what companies will do with their profits, because there is every possibility that little will go into employment, but instead sit around in bank vaults, go to shareholders, buy back shares or other companies, and so on. This might be good for companies, but not for the wider economy.

Knight Templar:

MaxwellSmart:

Knight Templar:

So they can only generate record profits, complaining all the while, or go out of business?
You don't see any other possiblity?

I believe that people should be rewarded for working hard. Profit is not evil, it is the life blood of prosperity.

That does not answer my question.

Clearly a politician in training.

MaxwellSmart:
You would rather they lay off workers due to poor profits ? This just goes to show that the socialist model of punishing profitability has simply not worked. Profitable companies are a sign of a strong economy, where employment growth will shortly follow.
Capitalism at it's finest.

Shortly. As in, 2~5 years. You're working with some fine time scales.
The feds just downgraded their projections for the US economy. Estimates are that unemployment will stay well over 8% for at least two years, and won't return to it's former vitality for more than five years. Not to mention that companies have been posting record profits for some time now.
So yeah, so basically what these conflicting news suggest to me is that the record profits have very little to do with the domestic economy. I wonder how much of those profits come from the financial sector and companies that got bailouts.

MaxwellSmart:

Things should go to those who are best at competing for them. Not those who get hand outs.

And I'm willing to bet that the companies that got the handouts accounted for a significant chunk (if not the majority) of those record profits.

TheGuy(wantstobe):

They won't hire until a critical mass of demand is reached when compared to the current labour forces ability to meet that demand. Right now they've shown that they can meet demand that is not all that much lower than the mid 2000's without anywhere near as many workers and will be loathe to hire any more than is absolutely necessary not due to wanting simple profits but due to wanting profit "growth" above that of inflation and above pre crash levels which have been taken as a new baseline.

I really hope that consumer demand in the US isn't rising significantly. If it is, then another crash like the 2008 one is coming soon. The average consumer in the US is already in debt, with real wages declining. So how the hell is a weak economy that is heavily in debt suppose to generate increasing consumer demand sustainably? The US economy went decades of living beyond their means before the crisis, so the steady state level of consumer activity for the near future should be well below the pre-crash levels.

Pingieking:
I really hope that consumer demand in the US isn't rising significantly. If it is, then another crash like the 2008 one is coming soon. The average consumer in the US is already in debt, with real wages declining. So how the hell is a weak economy that is heavily in debt suppose to generate increasing consumer demand sustainably? The US economy went decades of living beyond their means before the crisis, so the steady state level of consumer activity for the near future should be well below the pre-crash levels.

Which is why I said that they won't be hiring anyone even with these profits because there isn't a surplus of demand nad you're right in that there won't be for a long time. Personally I don't see UE dropping below 7% no matter what happens anyway.

My pre crash baseline comment was worded badly. I meant that companies see the profits of before the crash as the 0 mark and even if they are making a profit now if they aren't making as much profit as before then they see it as a loss. eg Company A makes $250 million in profit pre crash but last year only made $200 million in profit. This is seen as a loss despite still being profitable.

TheGuy(wantstobe):

Pingieking:
I really hope that consumer demand in the US isn't rising significantly. If it is, then another crash like the 2008 one is coming soon. The average consumer in the US is already in debt, with real wages declining. So how the hell is a weak economy that is heavily in debt suppose to generate increasing consumer demand sustainably? The US economy went decades of living beyond their means before the crisis, so the steady state level of consumer activity for the near future should be well below the pre-crash levels.

Which is why I said that they won't be hiring anyone even with these profits because there isn't a surplus of demand nad you're right in that there won't be for a long time. Personally I don't see UE dropping below 7% no matter what happens anyway.

A misunderstanding has occurred. I was quoting you in agreement. However, I surrounded it with negative statements, so it looked like I wasn't. My bad.

This has already been implied, but the problem isn't record profits as record profits are seemingly a good thing.

The problem is those making the record profits not reinvesting their money and instead hording it for a variety of reasons. If you can find a reasonable way to drive the businesses to stop hording you'll see job growth, but until then your stuck waiting for them to bounce back at their discretion, which will likely be a damn long while.

What the government should do is lower taxation on these companies. That way the wealth will trickle down. Right? That totally works right?

MaxwellSmart:

aPod:

MaxwellSmart:

I believe that people should be rewarded for working hard. Profit is not evil, it is the life blood of prosperity.

Too much money in too few hands is not prosperity, unless you are one of the few. And i'm a conservative here.

Once companies start to generate profits again, they will start employing people, this will be putting money in people's hands.

It's easily possible for a company to generate a profit and not to want to hire more people. Companies tend to employ people not so much when they are profitable, but when they can make money by increasing production. Those two are not the same things. Businesses mistake the two at their peril. The fact that these profits are breaking records suggests that businesses probably don't want to change what they're doing at all-- why mess with what works? There's no guarantee (and indeed every reason to think that it's untrue) that increasing production would increase profit. Consumer demand is still weak, and it will continue to be weak as long as employment is weak.

Danny Ocean:

dmase:
Does anybody else feel dooped

You mean duped? =P

Hehe.Dooped.

http://www.urbandictionary.com/define.php?term=dooped

Dooped, its how sophisticated people use duped or the aftermath of smoking a fatty and or rocking the bed.

 

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