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Profits Up, Earnings Down

Good news for big business seems to be everywhere — until you look past the big headline numbers.

by
Stephen Green

Bio

October 28, 2013 - 12:07 am

If you’ve read the business headlines for the third quarter, everything appears to be on the right track. Take a look at some of these reports:

steve_green_headlines_10-27-13-1

That’s just a small sample of what’s been a stellar season for profits. The good news seems to be everywhere — until you look past the big headline numbers.

Ford blew away estimates on profits, but total revenues were a miss. IBM reported high earnings, but revenues were a miss. At Honeywell, earnings were solid but revenues were a miss. Blackstone Group – revenues were a miss. Microsoft beat the Street on earnings, but revenues were a miss. Sirius XM — profits up, revenues down. EMC, the data storage systems supplier, missed on earnings. Costco, earnings miss. United Airlines, earnings miss. UPS, earnings miss. Dow Chemical, earnings miss. Houston-based energy company Cameron International — you guessed it — earnings miss.

Ominously, banks profits were up on the higher fees they charge you and me for simple services, but were down on job-creating investments. Most ominous of all perhaps, given how much work the Fed has done to reinflate construction, earnings and revenues were both down at Caterpillar.

If you’re not seeing a trend here, I just spent a lot of time on Google News for no good reason.

The belated jobs report was no more comforting. Just 148,000 new jobs created in September, with unemployment barely dipping to 7.2%, Our own Tom Blumer reports:

September’s report shows that the economy was already slowing down considerably before the partial shutdown commenced. Employers added only 148,000 jobs in September, down from 193,000 in August. The BLS’s Household Survey showed only 133,000 jobs added. Sure, the unemployment rate dropped to a seasonally adjusted 7.2 percent, but that’s only because a paltry 73,000 adults joined the workforce following a decline of over 300,000 in August.

September’s private-sector job growth was only 126,000, down from 161,000 in August. During the third quarter, monthly private job growth averaged only 129,000, down substantially from averages of 190,000 in the second quarter and 212,000 in the first.

As Tom noted later in his column, 30% of the new jobs created since President Obama was sworn in are temp positions — easy to hire, easier to fire.

Which is the crux of our problem, and why earnings are missing while profits are soaring.

ObamaCare’s employer mandate was supposed to kick in on January 1 of 2014, now delayed by executive fiat for one year. But the IRS will start looking back to January 1 of this year at employment practices, to determine how tightly to apply ObamaCare’s screws to each employer. Since that “look back” kicked in, part-time jobs creation has outpaced full-time job creation by three to one.

Between temp work and part-time work, America’s workers are feeling the squeeze. Insurance-premium increases will squeeze them further. That’s why earnings are down — under ObamaCare’s many unintended consequences, we just can’t spend as much money.

Those record profits? Businesses have done what they must do: They’ve cut all the fat. However, those kinds of cuts aren’t typical for a recovery. The U.S. economy enjoyed a hiring surge in the second half of 2009 and the first quarter of 2010, adding 250,000 or 300,000 jobs a month. Then ObamaCare became law and hiring slowed to a trickle, despite our economic recovery. Come the next downturn, employers will be forced to cut deep into the meat and bone right at the start.

And when that happens, it’s going to make this quarters’ missed earnings figures look like the good old days.

(Artwork created using elements from Shutterstock.com.)

Stephen Green began blogging at VodkaPundit.com in early 2002, and has served as PJMedia's Denver editor since 2008. He's one of the hosts on PJTV, and one-third of PJTV's Trifecta team with Scott Ott and Bill Whittle. Steve lives with his wife and sons in the hills and woods of Monument, Colorado, where he enjoys the occasional lovely adult beverage.

Comments are closed.

Top Rated Comments   
Corporations sitting on $4 trillion cash = no recovery. Uncertainty = no investment in capital goods = no recovery = no job growth. What uncertainty you ask?
Will the Fed continue QE? Will the inflated market crash if they stop QE?
What will happen to interest rates in the near and far term?
Will ACA be enforced? when?
What will ACA do to employment costs?
What will new MACT standards do to the cost of energy and industrial production?
What new MACT standards will be enacted? blocked?
Will natural gas rates remain low or will new regulations affect production?
Will the Senate change next year and become more business friendly or will the House change and become less business friendly?
What will amnesty do to labor cost? entitlement costs?
Will there be amnesty or business as usual?

Uncertainty we have met you...and your name is Government...and your first name is Barack.

47 weeks ago
47 weeks ago Link To Comment
This is a sign of the impending currency collapse. It's trivially easy to make profits when money is free. Just borrow a lot of cash (you can't do that, but big corporations like Verizon can), buy hard assets, and flip them for a higher price. During the year ending Nov 1923, Weimar Germany had only ten bankruptcy filings of any kind, in the whole country.

If the Fed ever stops QE, or even tapers it a little, there will be a wave of corporate bankruptcies and bank failures beyond anything in living memory.
47 weeks ago
47 weeks ago Link To Comment
My small business is down 60% year to date. When I say small, I mean it- I'm now the only employee. Christmas is my best time of year, but I'm not even feeling good about that. My business has been so bad that I'm eligible for welfare- and would make more money doing that. There is NO recovery, NONE. I sell things that people like, but they don't need them- and they are not buying things they don't need. I can make it a few more months if Christmas is only down 60%, but after that I might as well go for the welfare because I'm 90% disabled and too old to find any kind of job. You can expect the next 3 years to be even worse. I'm not looking for sympathy, don't need it- just reporting the facts on the ground which the msm won't talk about. Good luck to all.
47 weeks ago
47 weeks ago Link To Comment
All Comments   (22)
All Comments   (22)
Sort: Newest Oldest Top Rated
my neighbor's sister makes $84 hourly on the internet. She has been out of work for 6 months but last month her paycheck was $17537 just working on the internet for a few hours. his comment is here.... WWW.Rush64.COM
46 weeks ago
46 weeks ago Link To Comment
as Anthony responded I'm shocked that you able to profit $9934 in four weeks on the internet. check this site out-----> W­W­W.F­­B­­3­­­9.Ⅽ­­­O­­­Ⅿ
46 weeks ago
46 weeks ago Link To Comment
The world economy, most of all the US economy, is a huge
Just In Time system; It does not tolerate interruption well.

When businesses which supply people's needs fail,
or even cut back, the domino effect will be horrific.
46 weeks ago
46 weeks ago Link To Comment
up to I saw the draft 4 $5028, I have faith that...my... friends brother actually bringing home money part time at there labtop.. there mums best friend started doing this for only about six months and just now repayed the dept on there condo and got a great new Chevrolet. you can check here >>>>> http://x.co/2hNL1
46 weeks ago
46 weeks ago Link To Comment
The WSJ had a great article the other day on bank profits. The issue isn't the fees. It seems the banks are padding their numbers by allowing excess loan-loss reserves to flow into profits.

47 weeks ago
47 weeks ago Link To Comment
Have to pick a nit here. By definition profits=earnings I think what you were trying to say was that profits are up but revenues are down.

And this has been the hallmark of this "recovery". Businesses are building the bottom line numbers by cutting expenses as diligently as they can.
47 weeks ago
47 weeks ago Link To Comment
Corporations sitting on $4 trillion cash = no recovery. Uncertainty = no investment in capital goods = no recovery = no job growth. What uncertainty you ask?
Will the Fed continue QE? Will the inflated market crash if they stop QE?
What will happen to interest rates in the near and far term?
Will ACA be enforced? when?
What will ACA do to employment costs?
What will new MACT standards do to the cost of energy and industrial production?
What new MACT standards will be enacted? blocked?
Will natural gas rates remain low or will new regulations affect production?
Will the Senate change next year and become more business friendly or will the House change and become less business friendly?
What will amnesty do to labor cost? entitlement costs?
Will there be amnesty or business as usual?

Uncertainty we have met you...and your name is Government...and your first name is Barack.

47 weeks ago
47 weeks ago Link To Comment
up to I saw the draft 4 $5028, I have faith that...my... friends brother actually bringing home money part time at there labtop.. there mums best friend started doing this for only about six months and just now repayed the dept on there condo and got a great new Chevrolet. you can check here >>>>> http://x.co/2hNL1
46 weeks ago
46 weeks ago Link To Comment
Like your screen name..... I was considering "Shiny Beast"
46 weeks ago
46 weeks ago Link To Comment
Thanks. Shiny Beast would be an excellent moniker. Mine was originally BatChainPuller...PullerPuller. But that was too long and had illegal characters.
46 weeks ago
46 weeks ago Link To Comment
my classmate's step-mother makes $63 an hour on the internet. She has been fired for ten months but last month her payment was $16174 just working on the internet for a few hours. ....>>>>>>>> http://x.co/2iNwj
46 weeks ago
46 weeks ago Link To Comment
This is a sign of the impending currency collapse. It's trivially easy to make profits when money is free. Just borrow a lot of cash (you can't do that, but big corporations like Verizon can), buy hard assets, and flip them for a higher price. During the year ending Nov 1923, Weimar Germany had only ten bankruptcy filings of any kind, in the whole country.

If the Fed ever stops QE, or even tapers it a little, there will be a wave of corporate bankruptcies and bank failures beyond anything in living memory.
47 weeks ago
47 weeks ago Link To Comment
My small business is down 60% year to date. When I say small, I mean it- I'm now the only employee. Christmas is my best time of year, but I'm not even feeling good about that. My business has been so bad that I'm eligible for welfare- and would make more money doing that. There is NO recovery, NONE. I sell things that people like, but they don't need them- and they are not buying things they don't need. I can make it a few more months if Christmas is only down 60%, but after that I might as well go for the welfare because I'm 90% disabled and too old to find any kind of job. You can expect the next 3 years to be even worse. I'm not looking for sympathy, don't need it- just reporting the facts on the ground which the msm won't talk about. Good luck to all.
47 weeks ago
47 weeks ago Link To Comment
Mriordon, I understand an feel for you.

I know that the economy is bad when I go on auction sites for things that are wants not need, and see the huge sales that can be had on items that awhile back were at realistic prices or higher.

And you hit the nail on the head, there are needs and wants and when the economy is bad the wants don't get bought.
47 weeks ago
47 weeks ago Link To Comment
If you can boost your numbers so much by cutting back, just imagine how great your earnings could be if you go completely out of business...
47 weeks ago
47 weeks ago Link To Comment
There are no jobs on the Georgia coast. Real estate is dead & has been since it was obvious Barky was going to be annointed. Somebody? Give us a break.
47 weeks ago
47 weeks ago Link To Comment
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