Ignore the bubble doomsdayers

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James Surowiecki rejects the stock market bears who argue that the recent stock boom and high corporate profits are based on a speculative bubble created by the Federal Reserve.

“It’s certainly unusual for corporate profits to soar during a slow recovery. But…when it comes to the role that corporations play in the U.S. economy, the present looks very different from the past… Take taxes: one big reason that after-tax corporate profits are much higher than their historical norm is that corporations pay much less in taxes than they used to.”

“Then, there’s globalization… The global economy, even with its current woes, is projected to grow more briskly than the U.S. economy over the next decade, so corporations will continue to benefit. Finally, the decline of unions and the sluggish labor market have enabled corporations to cut payrolls, thus keeping profits high.”

FT Alphaville highlights a new forecast from Goldman Sachs predicting that the S&P 500 stock index will soar to 2,100 in 2015.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.