Skip to comments.Profits Are Booming. Why Arenít Jobs?
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. Its 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 economys 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!
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.
>>Because of Obambi’s policies. He simply can’t pass a law requiring businesses to hire people. <<
Tell that to Boeing.
The game of chicken being played by the barry zero administration is one he will lose. But the shrapnel damage will be considerable.
So your argument is that if the widgets can be manufactured overseas at half the cost, a domestic widget manufacturer should not locate his plant overseas but instead have his global competitors put him out of business by providing the same product at half the cost to his customer base. Sir, your sentiments are altruistic but unfortunately they are have no basis in economic reality.
Not necessarily, just numbers - dollars and cents. Companies make decisions based on the bottom line. The US corporate tax rate is too high - we need to lower it to become more competitive and generate growth here...one of the problems is that you have third world countries with virtual slave labor rates competing against American workers.
It’s a double edged sword - Americans get cheap stuff, but have virtually given up their manufacturing base in the process of “free trade”.
The fundamental “problem” is this: Technology enables us to produce more stuff with fewer and fewer people. And technology is getting better all the time.
The result is that We (the Human race) can now produce enough to survive without everyone taking part in the workforce. In many ways this is good, but someone needs to give people money to buy the things being produced. This costs a lot, especially in the West where people demand high living standards. And we dont let people starve. So...we try to make up the slack in the public sector, which involves borrowing $$ we don’t have.
Another solution is to warehouse people in Academia until the jobs open up. But, more often than not, what you end up with is very highly educated people who can’t find the work they feel qualified for (entitled to). That is a recipe for trouble and revolution. Its a big factor behind what you see happening in Egypt, Greece and Spain.
Believe it or not, the United States is still the world’s #1 manufacturer. Google it.
Who is John Galt?
Because the “job” is dead - but US laws, enacted at the behest of unions, punish the hiring of independent contractors and consultants.
Bottom line - corporations are leaving to get away from a more and more unionized workforce - who insist on more and more money for less and less work. The corporations aren’t going to be held hostage by unions who insist on sharing the profits of a company they never built but now want to take over. We can’t blame the corporations - look what is happening to Boeing with the Dreamliner. The Obama administration will not rest until Boeing takes their business out of the country as well.
It has been said time and again - Obama WANTS this country to fail and will use his position to achieve that end.
Tomorrow is June 1. Conditions have not improved in the six months since this article was published. In fact, the data released today shows that housing has not recovered at all in the past two years. Unemployment is still around 16%, not the government’s bogus 9%, which does not count the millions who no longer receive unemployment compensation but who have not found a job.
Anyone who votes for this total failure to be re-elected as president is dangerously ignorant.
11 hours ago...from a different source. Happy now? :)
“So your argument is that if the widgets can be manufactured overseas at half the cost, a domestic widget manufacturer should not locate his plant overseas but instead have his global competitors put him out of business by providing the same product at half the cost to his customer base. Sir, your sentiments are altruistic but unfortunately they are have no basis in economic reality.”
Baloney. Enter the tariff. Not only a reality in many countries, but what our Federal Government was meant to be funded by. Slap a tariff on foreign goods, and you build up a strong sovereign nation, not subject to the whims of other nations. Once upon a time, the U.S. took care of itself. That requires freedom and industry. When people are once again allowed to have the fruits of THEIR labor, and no one else’s, the citizenry will become motivated again. Multi-national corporations serve no good to anyone. The world isn’t only about money. Free traitors will reap what they’ve sown, they don’t understand the facts of life. That is, you must be loyal to someone, and some principle, not something, known as money.
Because there’s little licensed, authorized, degreed, approved domestic competition.
Hopefully it remains dire until the kenyan is tossed out in 2012 and then with a Conservative as President business booms.
We can not survive a lame duck leftist democrat marxist to maximize the damage he is doing now.
“In fact, the data released today shows that housing has not recovered at all in the past two years.”
Housing cannot, and should not “recover” to the inflated, manipulated bubbly level it was at. Don’t expect it to, ever. The houses were never really worth that much, nor can that price be sustained. It only was through banking and government manipulation, that ship has sailed.
ge pays no income tax... gm pays none... both got our money and perks from obama... gm and ge are using our money to finance their debt... wall street is owned like a cheap whore... yeah... some are reaping profit... but small businesses in America... the very backbone of the job market in America... are dying.
That’s really a huge part of it. Companies are learning how to work minus hiring employees if they can. It’s not just outsourcing, but also a lot of business owners can easily get the skills they need. Fro example, I’m going to be embarking on certification in website programming. Once I have that, I’ll be able to run my own news website, my own online auction house and bypass a ton of bureaucracy. I won’t have to split profits with a website programmer, an accountant, and someone to find stuff for me. Then, once I have things up and running, I’ll be making a huge profit without having to pay someone else, plus salary and health benefits. There’s no need ot take anyone on if I’m going to be able ot do it all myself.
For contracts, I have a legal service that does things for a drastically reduced retainer fee monthly and I don’t see why businesses should shell out big bucks just to retain a full staff that will end up expecting constant raises, bonuses, and other perks that will just drain the business. So many women want lavish maternity benefits and a guarantee that their job will be there for them, no matter how long they take off. Businesses can’t win in this country unless they start doing multiple things or outsource to someone who actually APPRECIATES the job and appreciates the opportunity instead of whining about not making enough to pay for multiple vacations and more and more and more perks and benefits.
So your answer is that any American that owns a large corporation should move it overseas to maximize profit and everyone else can starve...or start voting for the communists. Because that’s exactly what is happening. I know lots of scared unemployed/underemployed people who still vote Republican, but are beginning to see that the future of American business is not going to be able to sustain the working class much longer.
I don’t agree with them (perhaps because I’m still well-employed in a recession-proof industry), but I can understand how fear is making them take a look at what the other side promises, because business has told them “don’t look to us for a way to make a living.” and the leftists are saying, “we want to take care of you”. Even though their promises require major changes to our way of life, they sound a lot better than the promises of business which amount to “tough sh!t”.
What is the solution? Telling people to start buying stock so they can live off their investments is not a viable option and not everyone can own a business with a slave labor factory in China. I’m not flaming you for your comment. You are right. I’m just wondering if you have any ideas to go along with your cold, hard reality.
I just posted the following comment on a New Zealand blog site HERE:
Scroll down to:
by PhilBest | 31 May 11, 5:02pm
“Bernard, one MAJOR thing you and everyone else is missing.
There are TWO different USA’s. There are the “leftwing liberal” States, California, New York, Washington, Oregon, Florida. Then there is the heartland, the South, and the Bible belt, which I shall call “traditional USA”.
“Traditional USA” is NOT suffering negative consequences from outsourcing. They are the RECIPIENTS of 7-figures-per-annum population shifts from “leftwing liberal” USA, with business activity to match. “Traditional USA” did not have house price bubbles at all, and if it was a separate nation, it would be about the only one in the world with no economic crisis at all right now.
If you disaggregate the “USA total” figures, debt overhang is NOT A PROBLEM in “traditional USA”.
The outsourcing that you are compaining about, is almost entirely the consequence of anti-business politics in “leftwing liberal” USA - more of the “outsourcing” is going to “traditional USA” than to Asia. Boeing is going to North Carolina - just the latest and most prominent example in a several- years-long trend. Car manufacturing - and truck manufacturing, actually now more important than car - are thriving in “traditional USA”.
“Traditional USA” is a testimony to something. They have not lost their reason like most of the rest of Western civilization. They still believe in Judeo-Christian culture, which is a natural fit with freedom and free markets. There are even mainstream movements in some States to make Gold legal tender in-State. This is how intuitively clever these cornpone redneck bible-bashers still are.
Traditional USA is still humanity’s “last best hope”, the liberal leftwing States having abandoned this role for humanity. Freedom and free markets, low taxes, low regulations, low urban land costs, no politically correct pandering. Faith, family and flag. There is nowhere ELSE in the world today WORTH emigrating to; investing in; or starting a business in. Now for that green card lottery.......”
There is a very nasty reply from “Kakapo”, (scroll down a bit further) to the effect that he posted my comment on some forum in the USA (I reckon it was a liberal one like HuffPost), and he says what some of the responses were. Half of them are so ignorant as to have not understood my comment in the first place.
by PhilBest | 01 Jun 11, 1:21pm
“Oh good, I stirred up the liberal leftist utopians and liars all right. They’re not so much desperate, as simply incapable of seeing reality.
“Experience beats in vain upon the congenital progressive”.
I can see it from a mile away, that “Kakapo” put my comment up on some leftwing site like “The Nation” or HuffPost. I will do the same now on “Free Republic” and report back here later.”
Glad of what you guys would say in this bastion of common sense.
Interesting how the basic story hasn’t changed in 6 months. Though I think the actual employment picture is somewhat better than the official figures suggest. Why? Because the official figures don’t measure the unofficial economy.
Anyone with the time and money will be smart to learn as many skills as possible and then when business booms, have their pick of the newly healing/developing ecomony when it comes to jobs and opportunity.
Americans are being played, just like workers in the rest of the world. We think we’re “special”, but we’re not. We are just a commodity to be used by the puppet masters. Sorry to sound so cynical, but even if it’s not “intentional” the results are the same.
Add to the equation the fact that those in charge in this country have no concept of how to run a child’s lemonade stand, let alone our economy and you have a recipe for disaster. For the most part, Wall Street has bought and paid for our political process - to their benefit.
Or we just have a nice little world war, that kills off the excess.
In the contemporary ideology of business it doesn't mater if you burn next years seed because business decisions are based not on strategic thinking but making sure analysts who Lewinskied their way in life say something nice about you on CNBC and compensation schemes that encourages pawning the Royal Doulton.
I spent much of the last decade watching MBA's fire engineers who could neither describe their positions let alone evaluate their performance. They were driven only by the promise of a $50,000 bonus for every $1,000,000 dollars in salaries they cut. Want to guess how that company is doing today?
I mean yeah, we had some great profits from the sheer inertia behind several mature product lines but throwing out the product roadmap and licensing hardware from a Taiwanese ODM and outsourcing porting and further development to India never produced a shippable product. Their only remaining business is patent trolling and leasing empty office buildings (which is nowhere near as lucrative as it once was).
It isn’t American workers, it’s the government that is regulatory. But you transnational corporationists want it that way because it gives you an excuse to use communist controlled slave labor.
Obama is just perpetuating the GW Bush policies, Robert Zoellick and the “free traders” of the GHW Bush Clintons.
Because of the falsely named “free trade”. And don’t you for get for a minute that the US taxpayer is subsidizing all this, the few that are left.
Companies have cut back to a more efficient smaller gross which increases the bottom line.
No one except government is stupid enough to hire someone to give them a job!
In fact they prefer that the US be taken down a peg, as it wins them favors with the communist slave labor providers they seek to curry favor with.
I have no problem with punitive tariffs for countries that trade unfairly. I think you are correct in that free trade is not necessarily the answer in all cases especially in the case of those nations that trade unfairly,i.e,China. But corporate and business activity is governed by competitive survival.Corporations and business are not the problem. Trade policy, fiscal policy, tax policy and regulatory policy are.
If you do not think that business is about running a profit, why not invest your retirement funds in the domestic widget manufacturer who is “loyal” but cannot compete because their product cannot be competitively priced in the global marketplace. You can write off your investment as a charitable contribution after they go broke.
“Big corporations have no interest in helping the USA economy.”
No one in business large or small has any interest in helping the US or any other economy!!!
The only reason to be in business is profit!