❗Let's close the gap: We still need your help to raise $40,000 by April 1. Donate now

Foreign income to lift U.S. corporate profits

Jennifer Collins Apr 11, 2011
HTML EMBED:
COPY

Foreign income to lift U.S. corporate profits

Jennifer Collins Apr 11, 2011
HTML EMBED:
COPY

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.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.