New York Stock ExchangeThe Great Recession was chock-full of buzzwords. Even so, few captured the zeitgeist at the very depths of the downturn better than "new normal."

Coined by bond giant Pimco, that view posited a long stretch of anemic economic growth for the U.S. economy as households focused on paying down debts (thereby dampening demand) and as increased government intervention created more barriers for corporate profits. Earnings and stocks were doomed to suffer as a result.

But as third-quarter profits show sharp gains, investors should brace for a "new, new normal": a time when the fate of the U.S. corporate sector becomes increasingly decoupled from national economy.

Unemployment continues at dangerously high levels in much of the U.S., and the overall economy is in fact tepid. But this isn't getting in the way of booming corporate profits, and that new reality should be informing everything from investment decisions to overall economic policy.

It's Not Just Cost-Cutting Anymore

So far, third-quarter earnings have been very impressive, with 85% of companies topping analyst estimates. And expectations on Wall Street are now surging further, with October's estimates being far higher than what has been normal since 1990, according to research by Citigroup. Forecasts of record profits for 2011 seem increasingly credible.

Nor do tired arguments that surging profits are coming solely from cost-cutting hold much water. Revenue per share for the S&P 500 may be off the highs of the last credit-fueled binge. But they're still at levels first seen in 2006 -- hardly a horrible time for the economy -- and they seem to be in for a healthy rebalancing.

Some financial players have seen revenue fall dramatically, and rightly so. Citigroup (C) did an amazing $159 billion in revenue during 2007. However, third-quarter 2010 revenue came in just under $21 billion, putting the giant bank on track for about $85 billion in revenue this year on an annualized (but not seasonally adjusted) basis.

Or take Investment bank Goldman Sachs (GS), which pulled in $88 billion during 2007. Annualized earnings this year would be closer to $36 billion judging by the $8.9 billion in quarterly profit the company announced last week.

Turning to Booming Emerging Markets

But things are much better for American companies that make world-class products. Chipmaker Intel (INTC) is predicting revenues of between $11 billion and $11.8 billion for the next quarter. Even at the lower end, that would put the company well ahead of the $38 billion in sales it hauled in for 2007.

Boeing (BA) last week said it expects sales of between $64.5 billion and $65.5 billion this year, not far from the $66 billion in revenue the company chalked up in 2007.

Against this backdrop, investors should note that corporate profits and stocks have fared much better than proponents of the "new normal" might have expected. Multinational corporations are finding their fate tied less and less to the U.S. economy as they turn to booming emerging markets for growth.

Therefore, trying to boost demand by cutting interest rates or embarking on another round of quantitative easing, seems like an insufficient way to tackle problems like joblessness in the U.S. The old adage that what's good for General Motors is good for America continues to have its intuitive appeal. But as GM's business booms in India, investors should recognize that thriving corporate profits are less related than ever to a thriving U.S.

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Small Business Tax Relief Act. Defeated by Republicans in Congress. Main goal: remove incentives for overseas investments by corporations, including outsourcing. And, remember, since 1980, when Reagan took office and the top tax rate was 70% the top 1% of American wage earners increased their share of the total wages earned from 8.46% to 20% in 2008. The bottom 50% went from 17.5% to 12.75%.

October 25 2010 at 9:19 PM Report abuse +1 rate up rate down Reply

Some day, some how the masses will overthrow the Communists in China, and then the Fat Cats will find out what it means to be regarded as a paper tiger.

October 25 2010 at 8:40 PM Report abuse +2 rate up rate down Reply
1 reply to TOM's comment
Linda Jean

It's coming sooner than you or I think. Everything in China is moving forward at double time. First comes affluence and then comes the inevitable and unstoppable quest for the human freedoms of thought, speech, movement, dignity and respect of personal property. You and I will live to see a Chinese constitution and bill of rights enacted without a shot being fired.

October 25 2010 at 9:35 PM Report abuse +1 rate up rate down Reply

Some day, some how the masses will overthrow the Communists in China, and then the Fat Cats will find out what it means to be regarded as a paper tiger.

October 25 2010 at 8:40 PM Report abuse +2 rate up rate down Reply

These overheated economies in the far-East and third world, ain't stable, over there it's the stick instead of the carrot, inverted pyramid so to speak.. The elites at the pinnacle, but still at the bottom of the heap, do you feel lucky Fat Cats? The Chi-Com leadership knows that, they could be out in a Shanghai second.

October 25 2010 at 8:18 PM Report abuse +1 rate up rate down Reply
1 reply to TOM's comment
Linda Jean

Yes indeed, TOM! Even as a soldier in the Orient and the Philippines, I had to grease the wheels if I wanted to move things downtown or get things done for my friends on the economy and God help those who cross the wrong Shoguns! I am very hopeful that the seemingly super profits to be had in China will make moving into those markets irresistible for all of our Wall Street and Bankster Fat Cats; they'll find a system even more corrupt than their own. That's real justice! The Chinese term for those who don't pay "tribute" is Organ Donor!

October 25 2010 at 8:57 PM Report abuse +3 rate up rate down Reply

Keep it coming baby....the market is making me a rich man.

October 25 2010 at 7:09 PM Report abuse rate up rate down Reply

Doesn't take a rocket scientist to figure this one out. Corporate profits are surging because these same companies have replaced American workers with cheap foreign labor. China is the worlds leading maker of Wind turbine blades not because they invented them or have a better grip on the technology but they only pay their workers 80 dollars a week instead of the 1000 they would get here and no medical benifits. We are becoming a COLONY and soon the only thing we make here will be exploitation of natural resources

October 25 2010 at 6:50 PM Report abuse +2 rate up rate down Reply

Emerging markets want Importers to create jobs inside their markets for their citizens the escape of American companies to other locations outside the USA is bad news for wage and salary growth in America !

October 25 2010 at 6:33 PM Report abuse +2 rate up rate down Reply

Heh, we're free, we have the largest prison population on the planet, trillions in debt to non-free nations like Communist China, surveillance cameras on every corner, body cavity searches at airports, highest illiteracy and illegitmacy among western nations. Meantime we go around the world spouting about democracy, when we don't even have it here, recall the 2000 election? With the supreme ninnies choosing the president. 1% of the population owns 99 % of the wealth, and the rest are in hock up to their armpits, most can't even claim to have a legitmate job since they are government drones or welfare receipients or service economy paper pushers, one paycheck away from the streets. Without economic freedom you're just a slave ratteling his chains no matter what they call the country Democratic, Communist etc.. The only difference is the method they apply

October 25 2010 at 6:20 PM Report abuse +4 rate up rate down Reply

This is to Linda Jean. Linda I am pleased to learn that there is intelligent life in North Carolina. Wish I could say the same about Georgia and the rest of the South, and probably 98% of the country. And for all who think it is just the multi national corporations, let me tell you why the very (very) rich are so adamantly opposed to having the Bush Tax Cuts rescinded on them. Its not because they would have less to invest creating and growing companies...yada yada yada! They are not going to do it anyway. They have been spending huge amounts of money on personal property (eg. expensive villas, etc.)throughout the world, sheltering huge sums of money in offshore and Swiss accounts, and investing not here in the good old USA but in foreign emerging markets.

October 25 2010 at 5:47 PM Report abuse +3 rate up rate down Reply
1 reply to nmaccanico's comment
Linda Jean

Today's oxymoron, "Working Class Republican" This peculiar political bird is found only in the moss covered trees and bayous of the Bible Belt and the Deep South! Beam me up Scotty!

October 25 2010 at 9:25 PM Report abuse rate up rate down Reply

Reaganomics at work! Our transformation to a third world country is nearly complete. The Trickle Down economic policies established during the 1980's were designed and implemented specifically to eliminate America's middle class. Less than 30 years later, it seems that this goal has come to fruition. We now live in a country that generates tremendous corporate profit, while the bulk of our population can no longer afford the very goods that we produce. Welcome to Third World America. Aristotle some 2,300 years ago noted, “When there is no middle class, and the poor greatly exceed in number, troubles arise and the state soon comes to an end.”

October 25 2010 at 5:43 PM Report abuse +6 rate up rate down Reply