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Obama hails record corporate profits at press conference on the economy
At a press conference on the economy held Friday, President Barack Obama exuded indifference toward the plight of American workers, declaring that “the private sector is doing fine” and adding, “We’ve seen record profits in the corporate sector.”
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Got Pinhead?
Demon to some. Angel to others. He'll pop your economy apart.
Update:
MaxedOutMama points out that I should have included inventory adjustments.
Here's the new version.
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Source Data:
St. Louis Fed: Custom Chart
St. Louis Fed: Custom Chart v.2
9 comments:
I suspect that epic profits correlate with epic low corporate taxes (as a % of tax revenues). Ah, feel the warm trickle?
Too bad those profits aren't going to workers, but, as ordained by both parties, restricted to the top few percentiles.
Mr Slippery,
I suspect that epic profits correlate with epic low corporate taxes (as a % of tax revenues).
If true, then in my opinion the effect would definitely be temporary.
When profits are so high, all it does is invite more competition. And we can pretty much guess what more competition will do over the long-term. Sears? Nokia?
And then there is another effect. Each company that cranks out more products with fewer workers (automation? outsourcing?) sees it corporate profits go up and its wages go down. That is, unless we extrapolate to the extreme. How can the average company be hugely profitable if consumers have any wages? Of course, I suppose this is where Krugman steps in with his "borrow our way to prosperity" theories. Good luck on that one long-term.
Let's hope I'm wrong to think this way. Sigh.
I meant to say "don't have any wages" but I suppose I could have covered my mistake by claiming it was sarcasm.
Not my style! ;)
Let's see how households have done recently.
Oooo, not so good. Income down, net worth way down. It's almost like that 40% extra net worth was, dare I say it, an illusion?
At least corporate profits are up, which is important in an old fashioned Fascist state. Obama: "The private sector is doing fine."
A question--does your wage number include benefits? How much of this apparent anomaly can be explained by the increased cost of health insurance? What does the graph look like if you plot profit / employee-related costs?
I suspect that would put things in an entirely different light.
Agree that including health benefits would change the ratio.
Also expect corporate profits to plunge in the near term as lack of consumer demand, massive overcapacity bite.
I borrowed the chart for my site, TIA.
Mr Slippery,
It's almost like that 40% extra net worth was, dare I say it, an illusion?
Heresy! ;)
Neil,
I see your extra health care benefits and raise you missing pension benefits.
There's also a lot of other income that's missing from the chart. Dividends come to mind. However, if profits are only temporarily elevated, then so too may be dividends.
In any event, it is my belief that wages ultimately drive the economy. Without rising real wages there is little hope for rising real prosperity.
One serious concern I have is that Amazon.com can sell vastly more merchandise than Sears per employee. As Amazon grows and Sears shrinks, I have a hard time seeing rising real wages. Instead, I see a long-term worker glut. This is just one example of many. Sigh.
Scott,
Also expect corporate profits to plunge in the near term as lack of consumer demand, massive overcapacity bite.
I can only add this. If every person was as worried about our economic future as I am, then we'd be in a Great Depression right now.
Further, there would be nothing that Bernanke could do to stop it. As a saver, the more rates fall the more money I must save to compensate (or my nest egg would run dry before I die).
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