Beyond Corporate Profits: TV Talking Heads Miss Loss of Small Business Income
Among television talking heads on stations like CNBC and Fox Business, the health of business tends to be measured only by corporate profits. That’s understandable given that these venues focus on the performance of stocks and bonds being traded in the public markets. And of course, corporate profits matter.
But there’s a lot more to the well-being and profitability of American business than just corporate profits. Almost always ignored is proprietors’ income, which is the income of sole proprietorships and partnerships, along with tax-exempt cooperatives.
Before the recent recession, annual corporate profits and nonfarm proprietors’ income both hit highs in 2006, and subsequently took dives. Corporate profits fell by 22.4 percent from 2006 to 2008. Proprietors’ income declined by 14.9 percent from 2006 to 2009.
The dichotomy since then, however, has been stark and troubling.
Corporate profits in the first quarter of 2013 registered $1,985 billion (annual rate). That was up by 23.4 percent compared to their 2006 level of $1,608.3 billion.
Meanwhile, proprietors’ income in the first quarter came in at $1,186.9 billion. That was up by a mere 7.5 percent versus the 2006 level of $1,103.6. Adjust the numbers for inflation, and real proprietors’ income over this period declined by about five percent.
So, in real terms, the income of a huge portion of American business has failed to return to 2006 levels.
Wonder why the U.S. economy has been suffering through one of the worst recoveries on record, while corporate profits have rebounded? Well, the decline of proprietors’ income over a period of six-plus years is a significant part of the answer.
Raymond J. Keating is chief economist for a national small business organization; a weekly columnist with Long Island Business News; a former Newsday weekly columnist; and an adjunct professor in the MBA program at the Townsend School of Business at Dowling College.
Author of numerous books, his latest business and policy books are “Chuck” vs. the Business World: Business Tips on TV and Unleashing Small Business Through IP: Protecting Intellectual Property, Driving Entrepreneurship. Keating also is a novelist, penning a series of Pastor Stephen Grant thrillers.
His articles have appeared in a wide range of additional periodicals, including The New York Times, The Wall Street Journal, The Washington Post, New York Post, Los Angeles Daily News, The Boston Globe, National Review, The Washington Times, Investor’s Business Daily, New York Daily News, Detroit Free Press, Chicago Tribune, Providence Journal Bulletin, and Cincinnati Enquirer.
Trending Now on Affluent Christian Investor
Sorry. No data so far.
The Affluent Mix
Biden Oblivious To Illegal Immigration Issues... August 2, 2021 | Frank Vernuccio

Rob Arnott On Bubbles, Inflation, And Once-In-A-Generation Investment Opportunit... August 2, 2021 | Jerry Bowyer

The Federal Reserve’s Massive Theft Of Stability... August 2, 2021 | Jim Huntzinger

What To Do About This Difficult Market? August 2, 2021 | David Bahnsen

Letter On The Politicization Of Corporations... July 26, 2021 | Jerry Bowyer

Peak Of The Fake Bull Market July 26, 2021 | Michael Pento

Woodrow Wilson’s Administrative State vs. Gold... July 26, 2021 | Jim Huntzinger

Dividends, Energy, And Crypto July 26, 2021 | David Bahnsen

Whose Side Are You On? July 26, 2021 | Frank Vernuccio

Media, Left Ignore These Dangers July 19, 2021 | Frank Vernuccio

Mark Skousen On FreedomFest And How To Measure The Whole Economy... July 19, 2021 | Jerry Bowyer

Quantifying The Quantitative, Or Making Easy The Easing... July 19, 2021 | David Bahnsen

The Gold Standard Means A Rising Standard Of Living... July 19, 2021 | Jim Huntzinger

Book Review: Brian Domitrovic Reveals The Monetary Genius Of Arthur Laffer... July 19, 2021 | John Tamny

Steve Forbes: Time To Worry About Inflation, Not Hyperinflation... July 12, 2021 | Jerry Bowyer

UFOs Rescue Biden July 12, 2021 | Frank Vernuccio

Read This Classical Economist’s 200 Year Old Warning About Paper Money... July 12, 2021 | Jim Huntzinger

How Central Banks Murdered The Markets July 12, 2021 | Michael Pento

Everything There Is To Know About The Stock Market... July 12, 2021 | David Bahnsen

AT&T CEO: We’re Ill Equipped For Politics, And We’re Spending A Lot Of ... July 6, 2021 | Jerry Bowyer

Internet Bias Distorts National Conversation... July 6, 2021 | Frank Vernuccio

The Halfway Point Of 2021 July 6, 2021 | David Bahnsen

Join the conversation!
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse.