Was it good for you, too?

| Today's chart of the day plots earnings per share for the S&P 500, the titans of American business. The financial crisis has certainly been good for business!

Earnings per share for the S&P 500

The chart shows that after the precipitous 90% drop during the financial crisis, earnings have skyrocketed about 700% and have recovered nearly to the level of the dot-com bubble.

Put that together with another datum — companies are sitting on more cash than ever before:

Companies are sitting on over $1 trillion in cash

Ezra Klein, economics policy wonk for the Washington Post, chooses to interpret the graph to mean that the accumulation of cash doesn't reflect a lack of confidence in the economy but simply continues a long-term trend. True enough, the long-term trend is unmistakable, but think about what that means:

Granted, companies think they are doing the right thing: They don't see increased demand, so there is no need to boost production or hire more workers. Their quarterly earnings are looking good, making shareholders happy and CEOs feel secure in their jobs. They can wring ever more concessions from workers in an increasingly union-hostile environment. They can do pretty much what they want in the deregulated world.

Consumer spending has driven the US economy for years — well, consumer debt, more accurately. But consumers are leery: they see the monthly statistics about the paltry number of jobs created; they know they're one major illness away from bankruptcy; they know credit card interest rates are sky high; they know, many of them, that they are making payments on a house worth less than the mortgage; they read the headlines about lay-offs; they fear for their economic well-being, and for pretty good reason. Consumers are not going to drive a robust recovery from this horrible recession.

So who has benefited? Wall Street bankers and financiers are smiling all the way to the bank. CEOs of big companies are beaming as they watch their stock options and salaries burgeon. Republican politicians are wearing Cheshire cat grins at the prospect of returning to power as a result of having sold their Obama-is-ruining-our-country snake oil to a gullible public. And the heirs of the millionaires and billionaires who have timed their deaths to occur in this one year in which the estate tax is zero are especially gleeful.

Has it been good for you, too?

Last updated on Apr 13, 2018



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