While workers struggle, corporate profits soar
Yep. Corporations had a good quarter: Indeed, the best quarter they’ve ever had, booking the highest profits since they started recording such things.
Now there’s a huge caveat. The dollars aren’t inflation adjusted, so what sounds like stupendous profiteering is probably more like mere rapacious greed.
But inevitable conclusion is that corporations used the crisis to shed workers, and pocketed their paychecks.
Note also that profits have been plugging along steadily for nearly two years at a time when inflation is near record lows and unemployment records are running at post-Depression highs.
Catherine Rampell reports for the New York Times:
The nation’s workers may be struggling, but American companies just had their best quarter ever.
American businesses brought in $1.66 trillion at an annual rate 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 reports 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.
The increase in output in the third quarter was driven primarily by stronger consumer spending. Private inventory investment, nonresidential fixed investment, exports and federal government also grew. Growth in these areas was 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.