Tags: corporate | profits | job | growth

NYT: Corporate Profits Thrive, While Job Growth Falters

By    |   Tuesday, 05 March 2013 08:41 AM

Corporate balance sheets are doing a lot better than household balance sheets, as corporate profits soar but job growth continues to stagnate.

Corporate profits totaled 14.2 percent of the national income in the third quarter of 2012, the largest portion since 1950, The New York Time reports. Meanwhile, employees’ share of the national income registered 61.7 percent, near its lowest level since 1966.

That development has intensified since the last recession ended in June 2009, Barclays economist Dean Maki tells The Times. “There hasn’t been a period in the last 50 years where these trends have been so pronounced.”

Editor's Note:
 
Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Unemployment totaled 7.9 percent in January, with the economy generating just 157,000 new jobs that month.

The sequester is expected to cost jobs — to the tune of 700,000. But analysts don’t anticipate much of an impact on profits or the bull stock market.

“It’s minimal,” Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America, tells The Times. “The market wants more austerity.”

The sequester is unlikely to cut major companies’ earnings by more than about 1 percent, she says.

“Right now, CEO’s are saying, ‘I don’t really need to hire because of the productivity gains of the last few years,’” Robert Moritz, chairman of PricewaterhouseCoopers, tells The Times.

There is one sector of the corporate world that may suffer greatly from workers’ plight: retailers. The tepid growth in jobs and wages is restraining household purchasing power.

“The U.S. consumer worries me,” Laura LaRosa, director of portfolio management for Glenmede Investment and Wealth Management, tells The Wall Street Journal.

Fidelity Investments fund manager Thomas Soviero tells the paper he is now underweight retail stocks after starting the year neutral.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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Corporate balance sheets are doing a lot better than household balance sheets, as corporate profits soar but job growth continues to stagnate.
corporate,profits,job,growth
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2013-41-05
Tuesday, 05 March 2013 08:41 AM
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