Rob Schaap wrote: >G'day Ellen and Jim, > >Jim writes: > >>IMHO, the strength of the US stock market first and foremost reflects the >>strength of the US profit rate > >I get confused here. Many 1998 annual reports within the Fortune 500 >pointed at DECLINING profits, no? And might we not be conflating 'core >business' performance with profits made on the stock markets? I mean, if a >firm spends a heap on buy backs (& other stocks, too, I s'pose) on a >roaring Wall St, simply because of CEO stock options and the fact that >making the widgets of yore doesn't offer the returns you can get from >shares - why, wouldn't profit statements actually be reflecting Wall St >(and a bubble at that) rather than underpinning it? > >Sorry if this is crap. I just gotta know, that's all. Most of the improvement in US corporate profitability is the result of lower interest costs. Add together profits and interest (to get some measure of the corporate surplus) and there's little change since the early 1980s as a share of GDP. Doug
