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Corporate Profits' Share of Pie Most in 60 Years
By MarketWatch
WASHINGTON (MarketWatch) — It’s not news that Wall Street is doing much better than Main Street, but we didn’t know just how much better until the government updated the economic statistics going back to 2008.
Here’s the grim report that will surprise no one who’s been paying attention the past three years: The fat cats are fatter than we thought, and the incomes of regular folk are worse than we thought.
Profits account for a larger share of GDP than at any time in the past 60 years.As part of its regular revisions to the national income accounts, the Commerce Department told us Friday that corporate profits in 2008, 2009 and 2010 were actually $343 billion higher than earlier estimated.
And personal incomes of American families were $265 billion lower over those three years than previously estimated.
One more thing: the gross domestic product was also revised lower. Read our story: “GDP grows a slender 1.3% in second quarter.”
According to the latest data, profits of U.S. corporations are at record levels even as the U.S. economy gasps for air. Profits have been totally divorced from the economic fortunes of the American people.
The share of GDP going to wages has fallen.That tells you all you need to know about why the stock market has recovered from the Great Recession, and why employment hasn’t.
Corporate profits now account for the largest share of gross domestic product since 1950 — 12.6%. Wages and salaries account for the smallest share of GDP since 1955 — 54.9%.
With unemployment still in the stratosphere, wages and salaries are depressed. Fewer people are working, and the ones who are working aren’t getting raises. According to separate report released Friday by the Bureau of Labor Statistics, wages in the private sector have increased just 1.7% in the past year, only half as fast as prices have been rising.
So Friday’s news is grim, but it’s not really news, is it? Everybody knows the fight is fixed, as the poet has sung. “The poor stay poor and the rich stay rich. That’s how it goes, everybody knows.”
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