Courtesy of Pam Martens
Senator Elizabeth Warren Speaking at the Democratic National Convention, July 25, 2016
Senator Elizabeth Warren, during her speech at the Democratic National Convention in Philadelphia on Monday night, made the following statement:
“Here’s the thing: America isn’t going broke. The stock market is breaking records. Corporate profits are at all-time highs. CEOs make tens of millions of dollars. There’s lots of wealth in America, but it isn’t trickling down to hard-working families like yours.”
It is true that the stock market has been setting new record highs as measured by the Standard and Poor’s 500 and Dow Jones Industrial Average but that’s primarily because corporations are going into deeper debt and using the money to buy back their own stock. This is happening at a time of a scary profits recession for corporate America. Not only are profits not setting records, but profits in the S&P 500 have declined year-over-year for the past four quarters and this is shaping up to be the fifth consecutive quarter of profit declines.
Last Friday, FactSet reported the following for the second quarter of 2016 (Q2) based on 25 percent of S&P 500 companies having reported so far:
“For Q2 2016, the blended earnings decline is -3.7%. If the index reports a decline in earnings for Q2, it will mark the first time the index has recorded five consecutive quarters of year-over-year declines in earnings since Q3 2008 through Q3 2009.”
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