Corporate Profits

http://economix.blogs.nytimes.com/2010/11/12/a-high-water-mark-for-profits/?emc=eta1

According to a new analysis from Deutsche Bank's economics research team, corporate profits appear to be heading toward a record high. Those economists estimate that in the third quarter of 2010, corporate profits rose to $1.68 trillion at an annualized rate, higher than their previous peak in the third quarter of 2006 at $1.66 trillion. The numbers are not "normalized" for inflation but so what?

Since their cyclical low in the fourth quarter of 2008, profits have grown six consecutive quarters at an annualized rate of 38%. This is the fastest rate of increase in history.

According to Joseph A. LaVorgna, chief U.S. economist at Deutsche Bank: "That means that companies have more money than they know what to do with." This is a very scientific observation!

But, however humorous we find it, there's a real implication for the economy's number one lagging indicator: unemployment. While profits and productivity have been climbing, the unemployment rate is stuck at 9.6%. Deutsche Bank is watching to see if the numbers they're watching will correlate with an increase in hiring because those numbers usually do.

This is something to be optimistic about so we hope that the Deutsche Bank team is right.