Re: surge in U.S. corporate profits

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Thu May 20 2004 - 03:39:46 EDT

The profit surge also coincides with the post 2002 depreciation of
the dollar, almost 30% against the euro though only 12% against a
trade weighted basket of currencies (Bernacke, 1/04). Dollar
depreciation not only aids international competitiveness of firms,
especially ones that are not transnational corporations; it also
increases the dollar value of profits in foreign operations. But
given the J (?) effect of currency depreciation, perhaps the surge in
profitability follows too quickly the fall of the dollar to have been
caused by it.

In terms of Paul's variables, what has created pricing power? Is it
an effect of the spate of mergers and acquisitions in the late 90s?

Hasn't the decrease in unit labor costs had less to do with the
assimilation of productivity increasing technology than with the lay
offs of workers who would have otherwise been carried through a


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