More on Wall Street-U.S. Economy Decoupling
The rapid monetary growth is likely to mean two things with regards to the recession: first it will make it milder than it otherwise would have been at least in the beginning, although it is also likely to make a recovery later more difficult. Second, it implies that the recession will be a case of stagflation, not some Keynesian "weak aggregate demand" recession.
Meanwhile, while profits for large U.S. corporations have been much weaker than stock prices, they have nevertheless been positive, despite the deteriorating U.S. economy. The reason for this is found in this Bloomberg News story. Companies in the S&P 500 index received 48.6% of their revenues from non-U.S. sources last year, up from 30% as late as 2001. The reason for this is both the fact that slower economic growth and a falling dollar have decreased the relative importance of the U.S. economies and the increasing general globalization.