Corporate Profits At All-Time High As Recovery Stumbles

Corporate Profits At All-Time High As Recovery Stumbles

NEW YORK -- Despite high unemployment and a largely languishing real estate market, U.S. businesses are more profitable than ever, according to federal figures released on Friday.

U.S. corporate profits hit an all-time high at the end of 2010, with financial firms showing some of the biggest gains, data from the federal Bureau of Economic Analysis show. Corporations reported an annualized $1.68 trillion in profit in the fourth quarter. The previous record, without being adjusted for inflation, was $1.65 trillion in the third quarter of 2006.

Many of the nation's preeminent companies have posted massive increases in profits this year. General Electric posted worldwide profits of $14.2 billion, while profits at JPMorgan Chase were up 47 percent to $4.8 billion.

Corporate profits steadily increased last year as companies continued holding onto record amounts of cash and other liquid assets while cutting costs, laying off workers and wringing more productivity -- defined as the amount of output that comes from an hour of work -- from remaining staff, even as the recession eased.

To put that in perspective, said Lynn Reaser, the chief economist at Point Loma Nazarene University in San Diego, it's important to note that companies were able to bring production back up to pre-recession levels without hiring any more workers.

"We have now recovered all of the output lost in the recession, but we are still down by 7.5 million workers," she said.

In addition to layoffs, some companies continued to cut wages and benefits last year. Sub-Zero, the freezer and refrigerator manufacturer, told workers last year that factories in Wisconsin would have to be shut down, with 500 employees loosing their jobs, unless staff took a 20 percent pay cut, The New York Times reported.

Workers were expected to put in more hours without overtime pay, while staff facing fewer hours of work due to furloughs were expected to do as much as they would have in a full workday, according to NPR.