Record Corporate Profits; Still No Jobs
The Commerce Department said that companies made more money in the third quarter of this year than in the sixty years that they've been tracking this data. Yes, I know that the numbers are not adjusted for inflation, but when you see an annual rate of $1.659 trillion, well it sure does take your breath away. (The previous record was Q3 2006 at $1.655 trillion.)
Perhaps you might be thinking that companies are doing a lot better than most Americans...you would be right. How exactly did they pull it off?
Sure, companies sold more goods and services to other businesses and to consumers since the recovery began, but they also made money the old fashioned way--they cut their way to profitability and cranked up the pressure on existing workers to increase productivity. The end result has been seven consecutive quarters of profit growth.
But here's the problem: unless the economy improves from this point (the current 2.5 percent growth rate won't cut it), these companies would prefer to make money for their shareholders than take the risk of adding to their payrolls. I know that sounds like a raw deal, but that's what companies are supposed to do--increase shareholder value, not necessarily serve the public good.
Meanwhile, while corporations are flush, here's what most Americans experience in the economy:
- Jobs: Improving, but still lousy
- Housing: down 30 percent from the peak
- Consumer Debt: Down nearly $1 trillion since Q3 2008, but still weighing in at a hefty $11.6 trillion
Image by Flickr User AMagill, CC 2.0