"The Horders" is not some reality show where we see a couple who has gathered too much stuff in their cramped quarters but rather the story of what businesses are doing in a period of record profits.
The heads of the corporations in questions are short sighted as the more they follow this path of grabbing profits and not sending that back to the workforce in the form of pay increases and benefits eventually (and likely already) have reached a tipping point where the workers (a.k.a. consumers) will not have the $$$ to spend on the goods and service which generate the profits.
Instead of allowing things to go along as they should, they are trying to strangle the very Golden Goose who supplies their profits. The Unions didn't help either as they are only interested in their own interests and that is not supporting workers but rather keeping things good for those in charge of the Unions. The Unions "use & abuse" the workers just like the businesses.
Northeastern economics professor Andrew Sum called the mismatch "historically unprecedented" and said it bodes ill for future growth..."Workers have no money, no purchasing power, so that's why consumption is not moving," he said.
A freshman economics student can tell you what happens next - The "GREED" factor causes the whole thing to stutter as the companies make it impossible for people to buy the new cars and other durable goods needed because they haven't been able to keep up with inflation. This is further evidence of the " I got mine" aspect in businesses and it will only result in prolonged recession and pain for the majority. The cost of gas and other consumer goods have risen steadily in the last two 1/2 years that the Feckless Fool in the White House has been in charge. This has happened on his watch and he is solely responsible for a failure to act.
And what does the Feckless Fool in the White House have to say about it??
" Time to eat your peas."- President Obama
Oh, and for the record, the Empty Suit and his family will still be going for their 10 day Martha's Vineyard Holiday (at taxpayers expense) even if the majority of Americans can't afford to have a vacation.
HEY, Mr. President - Have you ever heard the term, " Leadership by example ?" - No, I am SURE you haven't. He is the King of the " Do as I say, not as I do" set. And just for the record, he'll be on the government payroll for the rest of his life, regardless of how many people's lives he wrecked with his incompetence.
Companies churn out profits but not jobs
By Steven C. Johnson Reuters 24JULY2011
NEW YORK (Reuters) - The sluggish pace of hiring may be hobbling the U.S. economy, but it's not been holding back big U.S. companies' profits thanks to growth overseas and cost controls at home. And that's bad news for the more than 14 million Americans without jobs.
Big businesses would normally be desperate for surging job growth as it would feed into domestic demand but these aren't normal times. Massive growth opportunities overseas, especially in China and other buoyant Asian economies, have some of the largest American companies on track for record profits, even if they're businesses are mostly treading water in the U.S.
The message last week from the chief financial officer of one of the nation's industrial giants couldn't be clearer.
"We've driven all this cost out. Sales have come back, but people have not," said Greg Hayes, chief financial officer at United Technologies Corp. "It's the structural cost reductions that we have done over the past few years that have allowed us to see strong bottom-line results.
The company, the world's largest maker of air conditioners and elevators, said second-quarter profit rose 19 percent, and it is doing most of its hiring in emerging markets where demand for its products is growing fastest.
It isn't alone in seeing profits climb in the current earnings reporting season.
About 78 percent of companies in the benchmark S&P 500 index that have reported second-quarter earnings have beaten Wall Street expectations. Many benefited after slashing costs when the financial crisis hit and then keeping tight control on them even as sales recovered.
Economists say the ability to do more with less has helped create a two-speed U.S. recovery. The S&P 500 has doubled in value since the recession ended and per-share earnings are currently on track for a new annual record, while employment remains below the level seen in late 2008 when corporate profits troughed.
Employers added fewer jobs in June than at any time in the past nine months, and the jobless rate rose to 9.2 percent - not far below its level of 9.5 percent in June 2009 when the recession ended.
"We've never seen the kind of shedding of jobs that we saw in this recession. America's corporations have never been running so efficiently," said Ellen Zentner, senior U.S. economist at Nomura Securities in New York.
LITTLE WAGE GROWTH
What's more, workers have never claimed such a paltry share of real national income growth. Economists at Northeastern University in Boston recently found corporate profits captured 88 percent of income growth between the second quarter of 2009 and the fourth quarter of 2010.
Workers' take? Slightly more than 1 percent.
"The only major beneficiaries of the recovery have been corporate profits and the stock market and its shareholders," the study concludes.
The high jobless rate is also keeping wage growth severely restrained in the U.S., which is also good for profit margins.
Recent Department of Labor data showed unit labor costs edged up 0.7 percent in the year to March, though not enough to make up a 2.9 percent decline in the prior 12-month period.
Northeastern economics professor Andrew Sum called the mismatch "historically unprecedented" and said it bodes ill for future growth, especially given many companies are sitting on their cash rather than investing it.
"Workers have no money, no purchasing power, so that's why consumption is not moving," he said. By sitting on profits, firms are acting like earners "who take their money and stuff it in the mattress. That's happening across the economy."
U.S. economic growth slowed sharply in the first quarter and was expected to remain below 2 percent in the April-June period.
Some blamed that on high energy prices and supply shortages caused by Japan's earthquake and are betting on a rebound in the second half.
A July Reuters poll put the median estimate for 2011 growth at 2.7 percent, down from 2.9 percent in 2010.
CHICKEN AND EGG
Businesses' ability to do more with the same or less -- what economists term increased productivity -- has been rising since the 1990s, thanks partly to technological advancements and the ability to tap markets in fast-growing, lower-cost developing countries.
Some of the most profitable firms are those with overseas markets. The largest U.S. conglomerate General Electric Co. tied its 21.6 percent rise in earnings partly to strong foreign demand for its heavy equipment, including jet engines and electric turbines.
In the United States, things are obviously different. Consumers are still trying to pay down large debts built up during the boom years, which suppresses spending and means there is little incentive for companies to hire.
"It's a chicken-and-egg thing -- whether demand or supply drives growth," Zentner said. "Studies show that lack of sales for small business is the biggest impediment to hiring."
Even companies selling basic consumer products are feeling the pinch as the jobless and those on low incomes watch the pennies. Pepsi Co Inc tempered its full-year outlook this week and said performance in its North American beverage business was worse than expected.
In the cost-conscious auto industry. General Motors Co's top U.S. sales chief, Don Johnson, told Reuters that its manufacturing managers have been "squeaking out extra units through improving line rates, adding on extra shifts". The company indicated it is in no hurry to build new factories or hire lots of new workers.
Uncertainty about future tax rates and policy, a by-product of the deadlock in Washington over whether to raise the country's borrowing limit and how to rein in a gaping budget deficit, has also made firms cautious, said Jacob Oubina, senior U.S. economist at RBC Capital Markets.
But Doug Cliggott, U.S. equity strategist at Credit Suisse, said investors and CEOs alike should probably prepare for more subdued earnings in the second half and beyond.
For one thing, growth abroad appears to be slowing as booming economies such as China and Brazil try to tame inflation. Heavy machine maker Caterpillar blamed slower U.S. and global growth for disappointing quarterly earnings on Friday.
And while U.S. interest rates are likely to remain very low for some time, companies won't be able to rely on massive federal spending, which Cliggott said also helped boost profits over the past two years.
(Additional reporting by Scott Malone in Boston, Nick Zieminksi in New York and Clare Baldwin in Detroit; Editing by Martin Howell)