Tuesday, September 21, 2010
The above chart is pretty eye-opening isn't it?
It shows corporate profits (from the BEA's tables 6.16B-6.16D) as a fraction of GDP (also from the BEA). The data are quarterly and go from 1960 to 2010 Q2. The blue line is all domestic profit of US corporations (both financial and non-financial). The red line is overseas profits of US corporations, while the green line is profits made by foreign corporations in their US operations and repatriated overseas.
You can see that whereas back in the '60s, foreign profits were a very minor contribution to earnings, we have now reached the point were in a good quarter, US corporations make half as much overseas as they do at home, while in a bad quarter they are almost making more money overseas. This is the effect of a number of decades of globalization and outsourcing. The acceleration since the 2001 recession is particularly striking.
This of course is the flip side of stagnant or declining wages in the U.S, and increasing consumer debt to make up the difference. It also speaks to the increasing divergence between the interests of the wealthy stockholding class, and the ordinary U.S. worker.
This graph is giving me that Stein's law feeling...