New York Times (09/16/12) Nelson D. Schwartz
The surge in U.S. corporate profits, which has far surpassed the gains in the wider economy since the end of the last recession, is waning. Economic bellwethers such as Federal Express and Intel are warning of lower quarterly profits due to weakness in global demand. According to Thomson Reuters, 88 companies have said that results will be below expectations.
U.S. corporate profits have been strong, because companies kept expenses low and delayed hiring new employees. Going forward, though, “those factors are going to be very hard to replicate,” says Ethan Harris, chief U.S. economist at Bank of America Merrill Lynch. The expected downturn in profits has not yet triggered huge layoffs. However, it is a factor that is curbing hiring.