Second-quarter earnings reports are coming in, and they're making Wall Street smile. Corporate profits are up. And big American companies are sitting on a gigantic pile of money. The 500 largest nonfinancial firms held almost $1 trillion in the second quarter, and that money pile is growing larger this quarter. Profits that plummeted in the recession have bounced back. Big businesses have recovered almost 90 percent of what they lost.
So with all this money and profit, they'll start hiring again, right? Wrong.
Bottom line: Higher corporate profits no longer lead to higher employment. We're witnessing a great decoupling of company profits from jobs.
The next supply-side economist who tells you companies need more incentive (i.e., lower taxes) before they'll hire is living on another planet.
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