3. U.S. Corporations, Flush With Profit, Could Not Possibly Hire More Workers
Residents of Main Street may have more trouble digesting Wall Street's corporate prosperity than their gargantuan Thanksgiving meals: According to a Commerce Department report this week, American businesses earned profits at an annual rate of $1.659 trillion in the third quarter, the highest figure recorded since the government began keeping track more than 60 years ago. On one hand, this is great -- and somewhat surprising, given how often we've heard from political partisans that President Barack Obama is "the most anti-business president in history." On the other hand, the Federal Reserve released new projections this week indicating that unemployment will be rearing its ugly head for a long time to come. The Fed is now estimating that more than 10 million Americans will remain jobless through the 2012 elections. The current 9.6% national unemployment rate will only fall to 9% by the end of 2011, and 8% by the time the next presidential election is taking place. Regardless, U.S. companies have many things to be thankful for this holiday weekend: Thanks to the tireless efforts of the increasingly strained U.S. worker, companies are seeing record productivity gains. The record corporate profits have also led to the biggest year in stock-repurchase activity by U.S. corporations since the financial meltdown, buoying share prices.
Even with the big rebound in corporate profits -- 28% in the third quarter -- Commerce reported that spending by corporate America on compensation for employees in the past year has only risen by 7.6%. Meanwhile, corporate insiders have been cashing out of their stocks this month through insider sales, too, at higher rate than at any other time in the previous few years.
Still, one has to suspect something is rotten in the state of record corporate profits when the unemployed have even corporate America's best pal and former Fed Chairman Alan Greenspan tsk-tsking U.S. corporations for their squeezing more drops from the increasingly bone-dry American worker. Greenspan said in an interview with Bloomberg this week, "When markets shut down, and capacity expansion comes to a halt, companies direct all of their capabilities toward harvesting untapped cost-saving innovations accumulated during the previous boom. We have been experiencing this harvesting for a year or so. You have to ask the question: Are we running out of backlog?" TheStreet Says: We thought "socialists" hated profits. Guess Obama must be a lousy socialist.