Rising Profits in Corporate America Are Boosting Executive Optimism

Rising corporate profitsCorporate executives in America are feeling better these days. Most companies are earning more than analysts expected, with more than 70% of companies in the S&P 500 beating profit forecasts in the last quarter. And 196 companies raised earnings forecasts above analysts' projections last month compared to 130 firms that cut them, Bloomberg reports, as a recovery in the global economy and Federal Reserve spending helps companies.

U.S. companies are raising their outlook not just for oversees growth, but for domestic profits as well. The last time American executives were this optimistic, stocks climbed 39% over the next 3 1/2 years, data compiled by Bloomberg show. Shipping companies and computermakers, often seen as economic bellwethers, boosted forecasts the most.

Equities markets are already responding. The S&P 500 has gained 203 points since falling to a 10-month low on July 2 after companies topped analysts' estimates and investors speculated the Fed would act to boost growth. The benchmark rose 3.6% last week, the fifth-straight weekly gain.

Companies such as eBay (EBAY) are getting a boost from more consumer purchases. And consumer borrowing in the U.S. unexpectedly increased in September by the most in two years, led by college loans and auto financing.

Adding to improvements in the U.S., international growth and demand are rising, helping to lift profits at companies with a large share of sales outside the U.S. Bloomberg notes that investors are betting profits at S&P 500 companies that get most of their sales from outside the U.S. will beat the market. Since July 2, such stocks rose 10 percentage points more than American-focused stocks.

But for some, such as Clorox (CL) and Jones (JNY), rising raw-material prices are reducing profitability. Both lowered 2010 projections, and Bloomberg is forecasting average quarterly GDP growth of 2.5% through June 2011, which it notes is "half the average rate in the two years following contractions since 1949."


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vobox3343

They just might be optimistic because they know the Republicans will push them from millionaires to billionaires, the upper middle-class becomes the lower middle-class and the middle-class becomes the new poor. Mission accomplished - Again.

November 09 2010 at 9:07 AM Report abuse +1 rate up rate down Reply
Pat

I was in Cabella's sporting store in CT on Sunday. 90% or more of the products sold were manufactured outside the U.S. by good or not so good American companies. I know that a Colunbia jacket that was on sale for $185.00 that was made in Indonesia(?) could retail for a lot less. At those prices it could easily be made in the U.S.. When these companies sent there manufacturing to China and the likes they did not do it to reduce costs they did it to increase profits period. In my opinion they are scummy Americans that have and continue to suck this country dry. We can no longer blame our problems on unions and people making a decent wage. American companies are way too greedy and selfish. Don't ever get the idea they care for people and this country. The best thing we can do as a people is act like they do and think of our selves. Screw the 2% at the top they got there by screwing you.

November 09 2010 at 8:06 AM Report abuse +1 rate up rate down Reply
1 reply to Pat's comment
Ross

Amen. It's all about profits, and not jobs for Americans. Corporations that outsource jobs overseas should pay more taxes. Those who create jobs here in the US should get tax incentives to do so. The American middle class has become an endangered species due to this greed in the marketplace.

November 09 2010 at 8:32 AM Report abuse +1 rate up rate down Reply
ForgetDC

They are optimistic about staying in business through all the turnoil, class warfare, private sector destruction & manipulation by govt, excessive regulation, excessive govt intrusion. Corps are not a social program. You can start your own if you want and find a way to generate revenue & turn a profit. More profit means more tax revenue. You mental midgets seem to forget that. We have had declining revenues the last 3 years due to declining profits and declining income. You don't raise revenue by taxing a declining tax base but by creating a climate where income rises. 35% of $2million is a lot more than 50% of $0 or $1million.

November 08 2010 at 5:59 PM Report abuse -2 rate up rate down Reply
1 reply to ForgetDC's comment
Ross

More tax revenue? Corporations are getting tax breaks, and then outsourcing jobs. More profit means more money in the pockets of greedy CEOs. You raise income by getting money to the middle/working/consuming class, not to the rich. Screw these greedy rat bastards that outsource jobs. Greed is the entire cause of this recession. Name calling is pretty childish too.

November 09 2010 at 8:34 AM Report abuse +1 rate up rate down Reply
geraldlsolis

Right... notice they're optimistic about rising PROFITS... not rising REVENUES, since they aren't. Rising PROFITS from the same level of REVENUE means one thing... the company is laying-off workers, cutting Pensions, cutting 401K matches, cutting Healthcare benefits, making employees work longer (for free, of course), and reducing vacations. Man, this is great... for CEOs, that is, since it means a bigger BONUS for them.

November 08 2010 at 9:43 AM Report abuse +7 rate up rate down Reply
2 replies to geraldlsolis's comment
scrappydobdo

I was thinking the same thing

November 08 2010 at 3:35 PM Report abuse +1 rate up rate down Reply
Ross

don't forget the cheap labor from outsourcing jobs.

November 09 2010 at 8:35 AM Report abuse rate up rate down Reply