Sunday, April 08, 2012

Corporate Profits Reached Record High in 2011

WSJ -- "Big U.S. companies have emerged from the deepest recession since World War II more productive, more profitable, flush with cash and less burdened by debt. An analysis by The Wall Street Journal of corporate financial reports finds that cumulative sales, profits and employment last year among members of the Standard & Poor's 500-stock index exceeded the totals of 2007, before the recession and financial crisis.

Deep cost cutting during the downturn and caution during the recovery put the companies on firmer financial footing, helping them to outperform the rest of the economy and gather a greater share of the nation's income. The rebound is reflected in the stock market, with the Dow Jones Industrial Average at a four-year high. "U.S. companies became leaner, meaner and hungrier," said Sung Won Sohn, a former chief economist at Wells Fargo WFC."

MP: The chart above shows after-tax corporate profits for U.S. corporations as a whole, which set a new record high in 2011 of more than $1.5 trillion, and were 20.5% above the pre-recession peak of $1.26 trillion in 2006 (adjusted for inflation).  While the weakness in the labor market continues to receive media attention, we shouldn't lose sight of the fact that U.S. corporations have never been more profitable.  

Measured by real GDP, output is just now barely above pre-recession levels, and measured by employment, the economy is still five million jobs below December 2007.  Measured by corporate profits, the economy has made a strong and complete recovery and is now above pre-recession levels by more than 20%.

17 Comments:

At 4/09/2012 1:12 AM, OpenID Sprewell said...

So the largest corporations have recovered- funny that the S&P 500's profits never went down that much, but I guess part of that is they just kick out the companies that crashed from the index and replace them with new ones- but that doesn't mean much for the rest of the economy yet. The good news is that corporate profits have been a leading indicator, according to this chart, but I doubt that will last for long, because the S&P 500 is an outdated formulation these days. The large corporation is a dinosaur that can't survive long in the information age, so trying to lump the 500 largest like S&P does isn't going to be meaningful for long.

Also interesting is that three of the top four largest firms are in software- Apple, IBM, and Microsoft- really goes to show how tech and software have gone to the fore. Of course, software is also much more volatile, so I suspect none of those three will stay at the top for long.

 
At 4/09/2012 2:29 AM, Blogger Thomas Esmond Knox said...

Many Zombie companies perished but some still survive.

 
At 4/09/2012 5:50 AM, Blogger Ed R said...

So the profits of "overtaxed" corporations have taken off beginning in 2009 and now stand at all-time records. Corporate cash reserves are likewise at record-high levels. Which 'anti-business' president should get credit for all this??

 
At 4/09/2012 8:01 AM, Blogger juandos said...

So is all this great profit actually measured in Bernanke dollars or what?

These Bernanke dollars have many, many uses...

 
At 4/09/2012 8:42 AM, Blogger Jon Murphy said...

Juandos-

They appear to be all in 2012 dollars.

 
At 4/09/2012 8:52 AM, Blogger bix1951 said...

recessions being caused by overheated economies means that the 2007 economy was overheated
I don't want to return to an overheated economy which will just trigger another recession
I don't want to see real estate going up 10% a year. I don't want to see tight labor markets.I often hear that the economy will not recover until real estate recovers. I don't remember people saying the economy can't recover until the internet bubble returns!!
Things are really great right now. I hope the smooth sailing continues

 
At 4/09/2012 8:53 AM, Blogger Junkyard_hawg1985 said...

Overseas profits have started to dip. If you look at the EPS of the Dow 30, the trailing 12 month earnings were $122.27 in 3Q11 and $118.13 in 4Q11. The big question is whether this is a temporary dip or the start of a trend. I suspect 1Q12 will be down from 4Q11 because of weak foreign markets.

 
At 4/09/2012 9:03 AM, Blogger juandos said...

"They appear to be all in 2012 dollars"...

Well jon murphy it seems to me that the real question is, "just how profitable was that profit?"...

 
At 4/09/2012 10:18 AM, Blogger Benjamin said...

Corporate America is doing better than ever. Imagine that.

The Bush jr. Era is Over.

 
At 4/09/2012 10:18 AM, Blogger Buddy R Pacifico said...

"The large corporation is a dinosaur that can't survive long in the information age, so trying to lump the 500 largest like S&P does isn't going to be meaningful for long."

The 500 largest U.S. corporations are multi-nationals and many are tilting to +50% foreign sales.

The information age has produced information technology that allows very effective Span of Control of far-flung business enterprise.

The effective use of IT is producing leaner but wider business operations with greater profits.

 
At 4/09/2012 11:20 AM, Blogger Che is dead said...

"So the profits of "overtaxed" corporations have taken off beginning in 2009 and now stand at all-time records. Corporate cash reserves are likewise at record-high levels. Which 'anti-business' president should get credit for all this??" -- Ed R

None.

Remind us again, what's the profit outlook at all of those "green companies"?

 
At 4/09/2012 12:02 PM, Blogger juandos said...

"The Bush jr. Era is Over"...

Stupidity strikes again....

Here's something you can send to your socialist hero: this is one great big propaganda ploy by the BLS to make Obama look good a few short months ahead of the pre-election debt ceiling breach, pardon, his re-election date. We prefer cutting to the chase. Here is today's chart of the day from BofA, which begs one simple question: when will the two time series recouple, because recouple they will, and how will America react to the realization it was lied to for 2% worth of unemployment "improvement"? The chart says it all...

 
At 4/09/2012 1:09 PM, Blogger Benjamin said...

Juandos-

Ethanol in every gallon of gas soled in America. Two endless wars. A collapse of our financial system. A GDP declining at a 10 percent annual rate. VA outlays triple to $140 billion a year---we will spend $1.4 trillion just of VA in next 10 years, enough to wipe out 10 percent of our national debt.

The Bush jr. Administration was a train wreck into a sewage treatment plant.

But here is a stupid one from the Obama idiots:

DHS won't explain its order of 450 million hollow point bullets


After 9/11, the Bush Admnistration created the Department of Homeland Security to prevent future acts of terrorism and deal with other domestic issues. Now in order to keep doing such, the agency is asking for 450 million hollow point bullets.
The DHS has signed off on an “indefinite delivery” from defense contractors ATK that will include, for some reason, nearly 500 million high-power ammunition for .40 caliber firearms. The department has yet to discuss why they are ordering such a massive bevy of bullets for an agency that has limited need domestically for doing harm, but they say they expect to continue receiving shipments from the manufacturer for the next five years, during which they plan to blow through enough ammunition to execute more people than there are in the entire United States.
---30--

A Bush creation wants 500 million rounds of hollow point bullets. To fight terrorism? As in one million bullets for every terrorist? Or, more likely, to give money to defense-homeland security campaign contributors?

GOP catamites will never criticize federal military spending so this will get a free pass.

 
At 4/09/2012 1:42 PM, Blogger juandos said...

"The Bush jr. Administration was a train wreck into a sewage treatment plant"...

Again abysmal Stupidity strikes again proving that pseudo benny's condition is chronic...

Bush you fool didn't start Home Security it was Bush AND Congress in a cooperative effort...

None the less the DHS is totally besides the point you fool, that wasn't in your original stupid statement, was it?

Do you take pride in making up these statements that are so stupid as to redefine stupidity?

"Ethanol in every gallon of gas soled in America. Two endless wars. A collapse of our financial system. A GDP declining at a 10 percent annual rate. VA outlays triple to $140 billion a year---we will spend $1.4 trillion just of VA in next 10 years, enough to wipe out 10 percent of our national debt"...

What part of any of that nonsense is factual?

More of your SS at work again...

 
At 4/09/2012 3:26 PM, Blogger Paul said...

"The Bush jr. Administration was a train wreck into a sewage treatment plant. "

That would be fair enough if he pointed out his boyfriend is far worse on pretty much every metric Benji pretends to care about.

 
At 4/09/2012 4:56 PM, Blogger juandos said...

"That would be fair enough if he pointed out his boyfriend is far worse on pretty much every metric Benji pretends to care about"...

Exactly paul and we all know that George W had a rather substantial number of very questionable calls as President but like you say, the comparison is almost laughable when it comes from pseudo benny...

 
At 4/20/2012 6:28 PM, Blogger james said...

Considering the so called outstanding performance of corporate america in terms of profits. Very little of it has helped the average worker. The wages of the average worker have declined over the last twelve years.

 

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