Economic snapshot june_2012

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Economic snapshot june_2012

  1. 1. Economic SnapshotJune 29, 2012Corporate Profits Down for First Time in Three YearsFollowing what had been a strong post-recession recovery, business experienced a slowdown in the firstquarter of 2012 as the Bureau of Economic Analysis (BEA) reported this week that profits from currentproduction for U.S. corporations decreased $6.4 billion, or 0.3% compared to the end of 2011. It was thefirst time that corporate profits reflected a quarterly decrease since the fourth quarter of 2008 when theeconomy was deep in the recession.A closer look at the data shows that the global economic problems stemming from the financial crisisin Europe may be affecting U.S. companies. The BEA reported that profits outside of the U.S. decreased$48.1 billion, meaning that domestic profits increased by $41.7 billion in the quarter.Despite the recent stumble, profits remain near historical highs. When the recession ended in June2009, corporate profits were the fastest major economic indicator to recover to pre-recession levels asU.S. companies emerged more profitable and with more cash. Even with the most recent decline, profitsremain 57% above the level reported at the end of the recession. Page 1 of 2
  2. 2. Economic SnapshotJune 29, 2012However, companies have remained hesitant to increase payroll as employment has increased just over2% since the end of the recession, while average hourly earnings and personal income have increasedjust under 5%. It remains to be seen if the soft first quarter results will lead to greater hesitation from thenation’s employers to hire new employees.Newmark Grubb Knight Frank Research Reports are available at www.newmarkkf.com/researchBy using any report or information provided by Newmark Grubb Knight Frank (“Newmark”), the recipient hereby acknowledges and agrees that: (a) Newmark makes no express or implied representations orwarranties with respect to the information and guarantees no particular outcome or result; (b) Newmark does not provide legal advice and does not represent or guarantee that any particular course of conduct,strategy, or action suggested by it conforms to any applicable law or regulation; (c) While Newmark has used its commercially diligent efforts to verify any underlying assumptions used in the report, someassumptions may not transpire and unforeseen events and circumstances may arise which may affect any such projections; (d) Although all information furnished in the report are from sources Newmark deemsas reliable, such information has not been verified and no express representation is made nor is any to be implied as to the accuracy thereof and it is submitted subject to errors, omissions, change of price,rental or other conditions; (e) All proprietary information, which may include ideas, concepts, frameworks, know-how, methodologies, analytical approaches, databases, business insights, products, software,and descriptions thereof developed by Newmark shall be the property of Newmark; the ownership of the report does not include any rights of electronic data processing files, programs or models completedfor research, unless specifically agreed to in writing by Newmark; (f) Such report shall be used for the sole purpose for which it is prepared and no other parties shall be deemed third party beneficiaries of suchreport; and (g) Any report may not be published, resold, distributed or communicated to the public without the prior written consent of Newmark. ™ Newmark and Knight Frank are trademarks of their respectiveowners Page 2 of 2

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