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Corporations Show Largest Profits in History Amidst Jobs Crisis

David Dayen

According to revised statistics, the US economy grew at a faster rate
than first expected, up to 2.5%. Earlier growth in Q3 2010 was
estimated at 2%. But the entire problem with looking at this topline
number is reflected in these three paragraphs:

But the most recent increase in GDP
still isn’t strong enough to make a dent in the country’s high
unemployment rate, stuck at 9.6% in recent months. Analysts say GDP
growth of at least 3% is needed to bring down the jobless figure, but
many don’t expect the economy to perform that well in the fourth quarter
or early next year.

The Federal Reserve’s latest economic outlook, to be released later
Tuesday, is likely to reflect concerns among policymakers that
unemployment will remain very high in the U.S. for the foreseeable

American corporations, on the other hand, have rebounded robustly
from the recession. Tuesday’s report showed corporate profits jumped 28%
in the third quarter from a year earlier, to an annualized total of
$1.66 trillion. That’s a record high and reflects deep cost-cutting in
the past and increases in demand for goods and services.

That’s right. Despite record unemployment, and no hope for reductions clearly in sight, corporations have experienced all-time record profits,
the highest since the Commerce Department started tracking the figure
60 years ago. They’ve learned to produce as many or more goods without


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This is something of a dream for corporate America – bigger profits
without those meddling workers to pay. This is the seventh straight
quarter of corporate profit growth, with none of those benefits being
shared with the working class. “Uncertainty” is blamed for the lack of
job growth, but corporations are sitting on giant mounds of cash while
they bask in the glow of their strategy to increase their profit margins
by cost-cutting.

The other part of this is that multinational corporations are reaping
profits from increased consumer spending in China and India. Their
markets there have expanded greatly in the past few years.

In the other side of the funhouse mirror, American workers continue
to have little hope for returning to the job. They are anxious about
their future prospects, and while they continue to spend on necessities,
they have trouble with the more substantive payments. Foreclosures and
defaults continue unabated, and home sales have dropped, which will probably lead to lower home prices.

But capitalism is working, and the great malefactors of wealth are happy. Happy Thanksgiving.

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