Foreign income to lift U.S. corporate profits
Money with word earnings
Steve Chiotakis: First quarter earnings season kicks off today, with aluminum giant Alcoa releasing its numbers this morning. Trends in corporate profits have been pretty robust lately. So why are companies doing so much better these days?
Here's Marketplace's Jennifer Collins.
Jennifer Collins: Profits are gushing into U.S. companies from their overseas operations -- up 40 percent in the last five years. Harm Bandholz is a senior economist at UniCredit.
Harm Bandholz: If the U.S. companies would have used their money to buy back stocks or to invest abroad, investment spending in the U.S. would be 70 percent higher right now.
Collins: 7-0 percent higher?
Bandholz: It's a big number.
Partly, he says, companies see developing countries are attractive with their speedy growth rates. And Harbor Advisory's Jack De Gan says that growth is snowballing.
Jack De Gan: The more cash that builds up overseas, the more money there is there for them to expand into other economies not here.
Companies like Coca-Cola, Caterpillar, Dupont have been hiring thousands of workers internationally. If the investment stayed here, some analysts say half a million more jobs would have been created in the U.S. last year.
I'm Jennifer Collins for Marketplace.