BUSINESS
01/10/2011 11:57 am ET | Updated May 25, 2011

High Unemployment Could Kill Corporate Profits In 2011

Despite an extended period of growth and expectations of the most profitable fourth quarter ever, more than a few corporate giants are facing little to no profit growth in 2011, according to the Wall Street Journal.

Companies such as Alcoa and Intel have been reporting higher profits over the past few quarters and are expecting a continued increase for the first quarter of 2011.

This growth, which helped the Dow Jones Industrial Average reach levels this month not seen in more than two years, comes in part from U.S. firms doing more business overseas, according to the Washington Post.

But, contending with record high unemployment in the U.S. and low consumer demand, U.S. businesses may be in for a rocky 2011. The weak job market is the biggest hinderance to company profits and it isn't expected to improve much in 2011, the Wall Street Journal notes:

"While the consensus is that hiring in 2011 will improve over 2010's rate, many still expect the unemployment rate will remain stuck at about 9% through year end, extending what is already a record, 20-month-long streak above that level."

Strong retail sales helped boost investor confidence and the stock market in December. But growth in industries such as airlines, food, telecommunications and construction are expected to fizzle out in 2011.

There is some hope that the a tax write-off for capitol expenditures will encourage companies to invest in new employees, leading to more consumer spending the Wall Street Journal reports. What do you think? Vote below: