Profits Based on Cost-Cutting

In General Interest by Jonathan Tasini0 Comments

   What does it mean when corporate profits are up–but people aren’t buying enough to sustain those profits? As in this report today via The Wall Street Journal:

A record number of U.S. companies beat earnings expectations in the third quarter, but a big portion of their profits came from cost-cutting, disappointing investors who were hoping for boosts in revenue.

   It means that the profits are coming on the backs of workers’ jobs and pay–and it likely means the profits are short-term boosts.  You can only inflate profits with cost-cutting for a short time if sales don’t come back–and I do not see where the money is in peoples’ wallets to sustain any kind of long-term recovery in sales.

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