Janet Yellen and the Federal Reserve Bank have a problem. The economy is weakening by the most basic of measurements and yet, they have continued to tell us things are getting better.
The most basic of measurements of employee productivity clearly show otherwise.
The amount of profit earned after taxes annually per employee on behalf of businesses has fallen to a six year low. For how long overall will American businesses attempt to expand if they are generating less profit per employee?
At the end of the first quarter of 2016, After tax profits per employee annualized fell to $9660.03 per employee.
2016 $9,660.03 on average per employee per year.
2011 $ 9,776.00
2009 $ 7,906.80
(You can calculate this yourself by using the profits after tax as reported by the Bureau of Economic Analysis, and dividing that number by the NFP number Americans working as reported by the Bureau of Labor Statistics)
With five years of improvement in technologies in the work place and record low interest rates, American businesses are making nearly $2,200 less in profits after taxes per employee than they did in 2012.
For as much as analysts would like for you to believe we have been in just a minor slow down that will recover this year, they would be wrong.
For as much as analysts would want to blame the Energy Sector for the slow down, they would again be wrong.
And if you have been blaming the greedy business owner for making money and keeping it all for himself rather than sending it your way, you’d be wrong again.
The profit growth has not been there. It has been consumed by Obamacare and other tax increases in addition to a weaker economy than anyone is willing to recognize at this point in time.
Businesses are in business not just to make a profit, but to actually have profit growth year over year. It isn’t happening.
Who is paying the price for all of this yet to be acknowledged economic weakness? We are. Because until we acknowledge we have a problem, we cannot work to resolve that problem.
Don’t be surprised when you do not get that raise, or it is less than you expect.
And now you know why.