High Profits to GDP From Low Wages Not Good

This from the “Buttonwood columnist” over on The Economist:

Domestic earnings depend not just on the GDP growth rate but on the level of profits relative to GDP; and international earnings depend on the strength of the world economy, currency movements etc. Profits are very high relative to GDP in the US at the moment which is partly down to international operations and partly down to the sluggish nature of wage growth; the latter may be good for the corporate sector but not for the economy as a whole.

via Investing: Growth and the markets | The Economist.

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