In recent years, there have been frequent comparisons of overall profits of American companies with the wages of American workers — and the profits have appeared to be doing much better. But the figures are distorted by inclusion of the overseas profits, and thus may overstate the differential.
Bulging Profits in U.S. Often Originate Overseas
By FLOYD NORRIS
AMERICAN companies have been very profitable in recent years — but not necessarily because of the American economy.
Government estimates indicate that profits of companies operating in the United States — whether American or foreign — have risen at an average annual rate of 7 percent in the current decade.
That is not bad, and in fact is slightly higher than the gains of the 1980s or 1990s, as shown in the accompanying charts. The figure is lower than the 7.5 percent rate of the 1970s, but it is worth remembering that these figures are not adjusted for inflation, which was higher then.
But government figures also indicate that the profits of American companies from their overseas operations have been growing at a much faster pace of 13.7 percent in the current decade, nearly twice the rate in this country.
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