Moritz, chairman of the accounting giant PricewaterhouseCoopers.Īt 218,300 employees, United Technologies’ work force is virtually unchanged from seven years ago, even though annual revenue soared to $57.7 billion in 2012 from $42.7 billion in 2005. “Right now, C.E.O.’s are saying, ‘I don’t really need to hire because of the productivity gains of the last few years,’ ” said Robert E. Simply put, United Technologies does not need as many workers as it once did to churn out higher sales and profits. ![]() The path charted by United Technologies, an industrial giant based in Hartford that is one of 30 companies in the Dow, underscores why corporate profits and share prices continue to rise in a lackluster economy and a stagnant job market. “You always try to find solutions, but you get to a point where it’s inevitable.” “If I don’t have the business, at some point you’ve got to adjust the work force,” he said. Depending on how long the budget tightening lasts, the job cuts at his company could total anywhere from several hundred to several thousand, he said. Chenevert, the chief executive of United Technologies. ![]() Maki said.Īt the individual corporate level, though, the budget sequestration could result in large job cuts as companies move to protect their bottom lines, said Louis R. “There hasn’t been a period in the last 50 years where these trends have been so pronounced,” Mr. In recent years, the shift has accelerated during the slow recovery that followed the financial crisis and ensuing recession of 20, said Dean Maki, chief United States economist at Barclays.Ĭorporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, he said, but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation. Over all, the sequester could reduce earnings at the biggest companies by just over 1 percent, she said, adding, “the market wants more austerity.”Īs a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966. “It’s minimal,” said Savita Subramanian, head of United States equity and quantitative strategy at Bank of America Merrill Lynch. But although experts estimate that sequestration could cost the country about 700,000 jobs, Wall Street does not expect the cuts to substantially reduce corporate profits - or seriously threaten the recent rally in the stock markets. 30 as part of the so-called federal budget sequestration, some experts warn that economic growth will be reduced by at least half a percentage point. With $85 billion in automatic cuts taking effect between now and Sept. Unemployment, after steadily declining for three years, has been stuck at just below 8 percent since last September. Other recent positive economic developments, like a healthier housing sector and growth in orders for machinery and some other durable goods, have also encouraged Wall Street but similarly failed to improve the employment picture. But a few rules of thumb can stave off some nasty surprises. Tips for Investors: When you invest and where matters for taxes. ![]()
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