Quantcast
Connect with us

Companies near record profits amid high unemployment

Published

on

NEW YORK — Major US companies are packing away record profits even as the economy falters, unemployment remains high and the debt-ceiling crisis has shaken confidence in the country, analysts said.

In July, corporate giants such as 3M, Caterpillar, Goodyear, Microsoft and Apple reported all-time high revenues in the second quarter of 2011, though the stock market still slumped amid fears of an economic slowdown and a possible government default.

ADVERTISEMENT

Of the companies in the S&P 500 list of large-cap firms which have reported their quarterly earnings to date, 72 percent have beaten analysts’ forecasts, according to Standard & Poor’s analyst Howard Silverblatt.

Moreover, if the current trend keeps up, the S&P 500 companies are poised to have their most profitable quarter ever, he said.

“Earnings are basically the only thing holding up the market at this point,” Silverblatt said. “They’re amazing numbers.”

The prosperity of large corporations may seem surprising at a time when many indicators show profound weakness in the world’s largest economy.

ADVERTISEMENT

The US unemployment rate stands at 9.2 percent, and the government last week said growth in the second quarter was a feeble 1.3 percent, far below economists’ expectations.

But analysts say US corporations are doing well in part because they slashed costs during the recession, laying off workers and reining in spending on plants and equipment, which boosted profit margins.

“They got lean and mean,” said Marc Pado, US market strategist for Cantor Fitzgerald.

ADVERTISEMENT

“Corporate America is very strong. They were preparing for a downward turn. Everybody was talking about a double-dip recession and they were bracing for that. They were holding on to cash, not hiring new workers and voiding themselves of inventory.”

The total cash held by US non-financial corporations surged to $1.2 trillion at the end of 2010, up 11.2 percent from a year earlier, Moody’s Investors Service said in a report last week.

One reason that companies are holding so much cash — and not spending it on investments or hiring new workers — is that they are worried about the shaky economic situation in the United States and Europe.

ADVERTISEMENT

“Management teams remember the rapid shutdown of the financial markets in 2008 and prefer to hold large cash balances even though the money is earning a low return,” Moody’s said.

Another notable result from the latest round of earnings reports is that many US companies are showing their best results in fast-growing markets such as Asia and Latin America rather than at home.

General Electric, Caterpillar and Dow Chemical were among the US corporate stalwarts which reported strong emerging market sales that helped offset slow growth in the United States in the second quarter.

ADVERTISEMENT

“Dow’s broad geographic reach and leadership in many attractive, high-growth end-markets firmly position us to benefit from the megatrends that are defining our future,” Dow Chemical chief executive Andrew Liveris said last week as the company announced a 73.4 percent rise in quarterly profits.

With the weakness of the dollar, which makes American exports cheaper for consumers around the world, that trend is only likely to accelerate in the future, analysts say.

“The big growth is happening outside the US, not inside the US, and you’ve seen a lot of companies increase their export sales as a percentage of the total,” said Cantor’s Pado.


Report typos and corrections to: [email protected].
READ COMMENTS - JOIN THE DISCUSSION
Continue Reading

Breaking Banner

Trump unravels over Ukraine call in extensive thread– then blames Democrats

Published

on

President Donald Trump continued to unravel over the call he had with Ukraine on July 25.

"This Scam going on right now by the Democrats against the Republican Party, and me, was all about a perfect phone call I had with the Ukrainian President. He’s already stated, NO PRESSURE! Where is the Whistleblower, or the 2nd Whistleblower, or the “informant?” All gone because their so-called story didn’t come even close to matching up with the exact transcript of the phone call. Was it a Corrupt Adam Schiff con? Why didn’t the IG see this? When do we depose Shifty Schiff to find out why he fraudulently made up my phone call and read this fiction to Congress and the American People? I demand his deposition. He is a fraud, just like the Russia Hoax was, and the Ukraine Hoax is now. When do the Do Nothing Democrats pay a price for what they are doing to our Country, & when do the Republicans finally fight back?"

Continue Reading

Breaking Banner

Trump lashes out at Pelosi for going to Jordan to fix his Syria flub

Published

on

Speaker Nancy Pelosi and Donald Trump

President Donald Trump tweeted his anger about Speaker Nancey Pelosi (D-CA) taking a delegation of leaders to Jordan to meet with those working on Syria.

"Pelosi is now leading a delegation of 9, including Corrupt Adam Schiff, to Jordan to check out Syria. She should find out why Obama drew The Red Line In the Sand, & then did NOTHING, losing Syria & all respect. I did something, 58 missiles. One million died under Obama’s mistake!" Trump tweeted Sunday.

https://twitter.com/realDonaldTrump/status/1186016354572353536

Vice President Mike Pence went to Turkey last week to attempt to negotiate a ceasefire, but what he ended up with was 120-hour freeze on bombing Kurds.

Continue Reading
 

Breaking Banner

Hillary Clinton posts fake letter from JFK to mock Trump’s absurd one to Turkey

Published

on

Former Secretary of State Hillary Clinton has taken up a new hobby of trolling President Donald Trump on Twitter.

The grandmother of three excelled in her sarcasm and stepped up her shade Sunday afternoon by releasing a fake letter from Former President John F. Kennedy to former Soviet Premier Nikita Khrushchev.

Read the fake letter and see the tweet below:

Dear Premier Khrushchev,

Don't be a d*ck, ok? Get your missiles out of Cuba. Everybody will say 'Yay! Khrushchev! You're the best!' But if you don't everybody will be like 'what an assh*le' and call your garbage country 'The Soviet Bunion.'

Continue Reading
 
 
Help Raw Story Uncover Injustice. Join Raw Story Investigates for $1 and go ad-free.
close-image