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Thursday, March 28, 2013

Corporate Profitability

Corporations are making "historic levels" of profit:


Economy built for profits not prosperity, by Lawrence Mishel, EPI: Newly released data on corporate profitability for 2012 show the continuation of historic levels of profitability despite excessive unemployment and stagnant wages for most workers. Specifically, the share of capital income (such as profits and interest, which are hereafter referred to as ‘profits’) in the corporate sector increased to 25.6 percent in 2012, the highest in any year since 1950-1951 and far higher than the 19.9 percent share prevailing over 1969-2007, the five business cycles preceding the financial crisis. ...

This helps to explain the lack of enthusiasm among corporate leaders for a jobs/stimulus program. They're doing fine. (Though that won't stop them from arguing that corporate tax cuts -- which would further increase the mountain of cash they are sitting on -- are the key to the recovery. Note however that business investment is relatively strong and "This historic share of income going to profits reflects historically high returns on investments, meaning more profit per dollar of assets.")

Update: I meant to add, if only there was some way of putting those idle funds -- and people -- to work productively (picture Paul Krugman banging his head against the wall in frustration as our infrastructure crumbles...)

    Posted by on Thursday, March 28, 2013 at 10:23 AM in Economics, Income Distribution, Unemployment | Permalink  Comments (21)


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