Even as the economy struggles, corporate profits continue to rise. Wells Fargo, the largest consumer lender in America, announced today that its third-quarter earnings rose 21 percent, to $4.1 billion. Citigroup, the nation’s third-largest bank, also released its earnings statement today, announcing that its third-quarter earnings rose 73 percentover last year, with $3.8 billion in profits. Even though JP Morgan Chase saw its earnings fall from a year ago, it still raked in more than $3 billion in profits.
Corporate profits as a share of the nation’s gross domestic product, in fact, are at their highest point since 1950. Recent snapshots, however, tell a much different story on Main Street, where small businesses are limping through an economic recovery that treated corporations much more kindly. According to the National Federation of Independent Businesses’ September report, two out of every five small businesses reported that profits are falling:
Reports of positive earnings trends were 1 point worse in September at a net negative 27 percent of all owners, not a pretty picture, but still one of the best readings in years. Not seasonally adjusted, 17 percent reported profits higher (down 3 points), and 40 percent reported profits falling (unchanged). Corporate profits are at a record high level as a share of GDP, but the story is very different on Main Street.
Small business sales are also dragging, as the percentage of all firms reporting higher sales fell over the last three months, and more businesses reported sales trending down than up. Worse yet, small business owners expect sales to continue falling over the next three months.