The financial backs of Americans continue to get strained and busted as corporations continue rake-in near all-time profit margins as real wages are at all-time lows, as the mirage of what’s left of the so-called middle class is being forced to keep borrowing and forced into more usury in an attempt to keep their heads above water.
MarketWatch published a brief report last week that highlighted this dichotomy being observed in the United States.
Author William Watts wrote:
In a note that accompanies the charts below, Deutsche Bank strategist Jim Reid notes that U.S. corporate profits and asset prices are near all-time highs, while the budget and trade deficits are near historic highs. At the same time, wages are near their lowest ever when measured as a share of gross domestic product.
Reid breaks down how these metrics fit together. Much like in 2000, investors are now arguing that high stock prices are justified by high corporate profits relative to GDP. But the current situation is more extreme, he noted. As the first chart shows, between the end of World War II and around 2000, U.S. profits largely ranged between 5% to 7% of GDP, so the 2000 bubble peak wasn’t all that remarkable.
Since the 2008-09 financial crisis, however, they’ve climbed to run between 9% and 11%. That means “at face value,” it may be easier to justify higher equity valuations now than in 2000 because of those higher profits — assuming one thinks they’ll prove sustainable, Reid said.
Read the rest of the report for free on Substack:
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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