Business Has Its Best Quarter Ever

Discussion in 'Economy' started by kiwiman127, Nov 23, 2010.

  1. kiwiman127
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    kiwiman127 Comfortably Moderate Supporting Member

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    Does that mean they will start hiring or continue to sit on their cash?

    Corporate Profits Were the Highest on Record Last Quarter
    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 $1.659 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.

    The government does not adjust the numbers for inflation, in part because these corporate profits can be affected by pricing changes from all over the world. The next-highest annual corporate profits level on record was in the third quarter of 2006, when they were $1.655 trillion.

    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.

    “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.
    http://www.nytimes.com/2010/11/24/business/economy/24econ.html?_r=1&hp=&pagewanted=print
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    Sooo, if the working class has money in their pocket they will spend it and contribute to our consumer driven economy. and thusly create demand.
    It's been widely reported that Corporate America has been sitting on their cash for quite awhile and that cash is well over a trillion dollars.
    By sitting on their money, they are not encouraging economic growth at all. They are not reinvesting in themselves. They ARE handing out dividends however.
    It has been apparent for quite awhile that Corporate America is just fine taking advantage of high productivity and then just sitting on the rewards (profits). So while Wall Street profits, Main Street spins it's wheels.

    Thoughts?
     
  2. rdean
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    rdean rddean

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    Unfortunately, that money will be poured into Republican campaigns to support moving even more jobs to China and deregulation in this country to make it easier for those poisonous products to come here.

    It's terrible that a political party would put the interests of a bunch of strangers making a buck over the best interests of this country.
     
    Last edited: Nov 23, 2010
  3. loosecannon
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    loosecannon Senior Member

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    This banal argument that big business creates jobs IS wearing thin.
     
  4. kiwiman127
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    kiwiman127 Comfortably Moderate Supporting Member

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    Isn't the fact that they do create jobs is why they are worshipped?
    If not, exactly why is Big Business worshipped?
     
  5. Sallow
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    Sallow The Big Bad Wolf. Supporting Member

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    Yes..jobs aren't created by Business or the Government.

    It's really the Lucky Charms Leprechaun that does it.
     
  6. Mini 14
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    Mini 14 Senior Member

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    Stashing mine away.

    Doubt many will go on a spending spree anytime soon.

    Maybe in 2012.
     
  7. kiwiman127
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    kiwiman127 Comfortably Moderate Supporting Member

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    Oh thank you for clearing that up!
     
  8. Flopper
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    Flopper Gold Member

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    Large corporations which is where most of the growth is occurring is expanding in China, India, and Indonesia. Eventually, they will expand in the US. Keep in mind that most of these big business are multinationals that are positioned to expand where the opportunity is greatest.
     
  9. kiwiman127
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    kiwiman127 Comfortably Moderate Supporting Member

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    There I fixed it for you.
     
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  10. finebead
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    finebead VIP Member

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    Economic growth used to mean good times for jobs. Not so much anymore. The nature of the economy has changed. It is not driven by labor. Labor content has been squeezed out of products through use of computers and robots, and the remaining jobs in manufacturing were shipped to China, Japan, South Korea, Mexico and Brazil for the last 30 years. Textiles are dead in America, shipped to Indonesia, Vietnam, China.

    We were told not to worry about the jobs we were shipping out, because we were losing "old school jobs" with low value content, and they would be replaced with "knowledge worker jobs" with more value to business, and we'd all be employed at "more interesting, cleaner and higher paying jobs". BS.

    There are too many people in the world for the work that is needed to be performed, so jobs that need labor are seeking the lowest price. Consider your job market carefully.

    Cutting taxes is not the answer, nor is balancing the budget (which is generally a good idea, but probably not exactly at the present time).

    I'm not sure how to solve this, but the nature of the economy has changed dramatically since the 60's and the old solutions are not working.

    We are through the looking glass on the economy and jobs thing, IMO.
     
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