Big Companies Set For Best Fourth Quarter Profit Ever

Even as unemployment remains high and Americans' finances slowly mend, big companies may be set for their most profitable fourth quarter on record.

Profits at S&P 500 companies are expected to have increased 20 percent between October and December, Bloomberg News reports. It would make for the best fourth quarter since Bloomberg started keeping records in 1992.

Companies benefited from stimulative government policy, but they also made money the old-fashioned way. Consumer spending, which constitutes about 70 percent of the nation's economic activity, helped boost profits, Bloomberg says, noting that estimated net income at Apple, one of the quarter's best performers, rose 47 percent last quarter. As demand for its products grew, Apple became the world's second most valuable company.

Big companies got a boost from rock-bottom interest rates, which have allowed them to hoard cash rather than use it to add jobs. In the third quarter, the most recent period for which such data are available, companies increased their cash holdings 7.3 percent, hitting a new record of $1.9 trillion in liquid assets. Relative to their short-term liabilities, U.S. companies haven't been this flush since 1956.

The jobless rate last year, meanwhile, hasn't been this high for nearly three decades. It fell slightly in December, to 9.4 percent from 9.8 percent, while the economy added 103,000 jobs, far fewer than many economists expected. While the economy does seem to be on the mend, real improvement in the lives of most Americans could still be a long way off.

Falling home prices continue to hammer household finances, eroding Americans' wealth and making them more vulnerable to default and foreclosure. Homeowners' equity, or the stake they can claim in their homes, dropped two percentage points in the third quarter, to 38.8 percent, ending five quarters of steady growth, according to Federal Reserve data.

Between this year and 2012, the Fed expects 7.4 million homes to enter foreclosure.

Comments

[vippy]

02:43 PM on 01/09/2011

...yet the politicians scream to reduce their taxes even more while insisting that Social Security and Medicare be slashed. 

[zelda777]

11:23 PM on 01/08/2011

"best fourth quarter profit ever..."

millions of people are still out of work...

and the conservative mythology continues to unravel

[muck-raker]

08:52 PM on 01/08/2011

here is where your job went, sure the mega US Corporation sez they made record profits. They did it in the video you will see here....they are paying Seventy cents a day Indonesia, Eight-Eight cents a day Bangadesh...take a look you will see your job here...now if we could only convince our BOUGHT Legislators to reimpose the IMPORT TARIFF..you would see the machinery being shipped back to the good ol USA.
http://video.google.com/videoplay?docid=-7932485454526581006#

[lodkia]

01:00 PM on 01/08/2011

Nice picture! That's a bundle!

[AZreb]

10:42 AM on 01/08/2011

Not mentioned is that fact that many of these big corporations have outsourced their labor and built factories in other countries. Sure doesn't help our unemployment situation, but adds to the bottom line of the corporations.

[nomoredead]

07:34 AM on 01/08/2011

But, but, but...I thought the repubs and CNBC have been saying Obama is anti business and Washington is making it difficult for them to do business and there is too many regulations for them to make a profit and there is too much uncertainty for them to start growing and and and.....

Repubs elected..
Gas going up
Commodities ( food ) going up
Health insurance going up

A republican victory !

[vippy]

02:44 PM on 01/09/2011

We are long past the party affiliation.  It does not matter which party is at the helm, both got us where we are today and I don't see an improvement unless we vote 3rd party.  But the country is not ready for this yet it seems.

[GreenKate]

06:31 PM on 01/09/2011

there is no third party.

[buhhdaluvsallbutyou]

05:43 AM on 01/08/2011

another bad quarter for me. darn it, maybe next time

[KayDGee]

02:08 AM on 01/08/2011

It's easy to make your numbers (other than the usual cooking of the bookos for sstock analysts benefit) when utilizing slave labor. Kick half the staff to the curb and expect the Morlocks to continue taking one for the team doubling up on frozen wages while the execs reward themselves. And their Republican buddies are trying to peel back the healthcare so that they can keep the indentured tied to them.

[FreedToChoose]

07:19 PM on 01/07/2011

As one who has worked for others and been self-employed, my view is that companies adjust to business conditions. That profitability leads employment growth is a good business practice. Adding workers prematurely increases costs and severely reduces profits should revenues dip. Better to wait a bit to add employees than add them too soon. No good company delays hiring just to increase profits because they will lose business to competitors.

[NoBlueDogs]

09:13 PM on 01/07/2011

Untrue - companies not only delay hiring, they hire overseas. Plus they work their existing staff even harder.

Their competitors are all doing the same.

[SaveWillowpark]

07:06 PM on 01/07/2011

The only reason they are making those profits is because they are not paying people....don't you find it odd that their profits mirror real unemployment numbers? Real meaning, take the published unemployment numbers, then add the amount of people no longer being counted because they are no longer receiving unemployment. Then add as someone told me earlier, 15% for those people who are underemployed and not receiving benefits.

That in my opinion is why everyone is castigating corporations for making profits. Do I even need to spell it out to you that in addition to that American companies are also making profits because they are hiring workers in inhumane conditions in other countries that work for dollars a day for which they don't have to pay benefits or workers comp etc. etc.?

[Rugby1]

07:17 PM on 01/07/2011

Dude you have to be kidding me. Their "profits mirror real unemployment numbers." Conspiracy theory much. Please explain to me how corporate profits are generated from culling out the information in the unemployment numbers. I want an actual formula and data, and if you have that I will be happy to debate it.

So from your second paragraph I gather you (possibly others) are upset because American corporation are hiring workers, say in India, or Sri Lanka, or China and then paying them less than what we earn here, and working them in difficult conditions? Correct?

Little problem. Most of the people want those jobs? Ever been to a 3rd world country, talked to those people? Those jobs in sweatshops, factories or mines or often envied because the wages paid although low compared to us, or extremely high compared to say... Working on a farm for sustenance. Global corporations, bedeviled as they are, are one of the reasons countries like China and India are pulling millions of citizens out of poverty. Yeah that's terrible.

Need I also point out that America got started much the same way? Farming, to industry in rough conditions, to now a knowledge based economy. What we can have that transition but it offends your sensibilities if other people want the same thing.

[SaveWillowpark]

07:57 PM on 01/07/2011

I am simply pointing out that while unemployment numbers continue to rise corporation are posting record profits. I also have first hand experience with my own company doing extremly well, meanwhile the share of our health insurance that they pay is decreasing and every time we start to think things are going to get better the company changes the commision structure to make sure we never make more.

You sound like you understand business, why don't you work the numbers and tell me how it works?

Yes, to your second question, I am upset about American companies hiring in other countries. I do think Americans would like to do those jobs. My grandmother used to work in textiles years ago before that industry left America. It was a sweat shop but it allowed her to raise 4 children on her own in the 40's. At this point, American's would be willing to do almost any job just to keep food on the table.

If we don't get a grip on companies hiring overseas our wages will equalize with wages there. Is that what you think needs to happen?

[NoBlueDogs]

09:15 PM on 01/07/2011

The knowledge based economy is already going overseas.

Other people are getting prosperous off our backs.

What if the American market disappeared? Who would they get rich off then? Who would they sell their stuff to? This MATTERS because if our economy collapses and the Dollar loses value then China, India and Sri Lanka, etc will have no America to sell their stuff to... their imports will be too expensive relative to American labor.

[Rugby1]

06:47 PM on 01/07/2011

Why is everyone castigating corporations for making profits? So what?

They are not doing anything immoral or illegal, so they made cash. Is it because they are not hiring that everyone is upset?

Hmmm... Let's see "rock bottom interest rates." So they do not invest because they can't make a lot on their investments, there are onerous HC regulations coming down that no one has interpreted yet so no one knows how much it will actually cost to hire a new employee, and slack demand in the market due to high unemployment. Maybe they are slow on hiring in the US because our government consistently puts up barriers to hiring and makes things much harder than they need to be.

[postpostmodern]

06:52 PM on 01/07/2011

The answer is simple, they castigate because they want to limit profits to a "fair" level. In other words, someone else should earn the money so they can stay home and smoke pot all day.

[Rugby1]

07:06 PM on 01/07/2011

Hahahah. I never thought of it that way, but you may be on to something!

[SaveWillowpark]

07:07 PM on 01/07/2011

That is irrational...just to let you know.

[nobodysgirl]

05:50 PM on 01/07/2011

Everyday we see more and more headlines about how tough this economy is on middle, working-class people, coming from all directions - retirement security, hitting the public pensions, I couldn't even begin to list the ways we're under attack now.

Then we read things like this article. Many others. How the rich are spending elaborately and Wall st is profiting, on and on and on. And it makes me wonder how long this can go on before there are riots in the streets, with crime most certainly will go up as people become more and more desperate. Republicans, better put some additional crime-fighting funds in your budget. No one lays down and plays dead for kicks or chuckles.

[postpostmodern]

06:53 PM on 01/07/2011

Here's a tip, buy some stock in those companies. Then you can make a profit, too.

[NoBlueDogs]

09:17 PM on 01/07/2011

With what? Monopoly money?

[innerpuppie]

05:19 PM on 01/07/2011

Big business has constipated itself with all of the huge helpings of $ that were financed on the backs of the American worker. Do they care? Heck NO, money is money and when it comes to money all they want is MORE! They got piles of 'no strings' funds via DC and they aren't about to share it with the hovering masses - why should they? There is no one telling them that they should and when they got the big checks there was NO contract. Boy, I sure wish someone would walk up to my door, hand me a basket of money and then walk away.

[postpostmodern]

06:00 PM on 01/07/2011

You take pennies? I need to unload some.

[marilyn 63]

05:16 PM on 01/07/2011

HEY!! GUESS WHAT!!!! AMERICAN COMPANIES ARE HIRING> read small print ( hiring overseas China, India, and everywhere else but America.

[Kasado]

05:15 PM on 01/07/2011

But just try to find a parking spot at Walmarts at 10 AM Saturday.