Profit Collapse Continues
The CBO released its monthly budget report yesterday. It showed that during the first 6 months of fiscal year 2009, the deficit has increased to $953 billion, from $313 billion in the same period in fiscal year 2008. This means that the yearly budget deficit will likely be even higher than the $1.5 trillion I projected earlier.
One detail that is of particular interest is that corporate income tax revenues fell as much as 90% in March, and 57% for the first 6 month of fiscal year 2009. Some of that decline (particularly in March) reflects that many loss-making companies get refunds for previous tax payments they made during profitable years.
This confirms that corporate profits are basically collapsing. Another confirmation of this came tonight when the first Q1 earnings report from a large company, namely Alcoa. While a big deterioration was anticipated, the loss turned out to be even greater than expected.
One detail that is of particular interest is that corporate income tax revenues fell as much as 90% in March, and 57% for the first 6 month of fiscal year 2009. Some of that decline (particularly in March) reflects that many loss-making companies get refunds for previous tax payments they made during profitable years.
This confirms that corporate profits are basically collapsing. Another confirmation of this came tonight when the first Q1 earnings report from a large company, namely Alcoa. While a big deterioration was anticipated, the loss turned out to be even greater than expected.
posted by stefankarlsson at 9:35 PM
3 Comments:
I would like to see you comment more on the Swedish economy. Few, that I know of, do this from your clear sighted point of view.
An especially interesting topic could be the differences between Swedish and American conditions. Public finances and trade balances are two factors which are opposite to those in the US. We have much less non-banking "rescue" measures from our government, and we're lagging their price corrections in real estate markets (although, of course, stock markets are immediately interlinked).
How will this play out going forward? How will Sweden continue to differ from the US?
Please consider commenting on some such topics sometime.
Kapitalist, my analysis of the Swedish economy is published in my Swedish language blog.
Yes, I've found it now!
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