A post has been circulating on social media claiming that corporate profits are driving inflation. The content is sufficient to make any sane person offended. Here it’s – but wait a moment to be outraged.
Company earnings statements that circulated on social media.
The numbers are outrageous. How much do corporations should earn? An interesting query, but first: how much do they cost? Strictly speaking make. These are large, publicly traded corporations whose financial records are easily found online. Start with the businesses’ supposed profits. Here are the 2023 numbers from S&P Capital IQ (with correct company names), which, amongst other things, summarizes public filings from listed corporations. Some on the list were way too high, others were actually way too low. All report net income (the financial term for profit) at the top of their 2023 fiscal 12 months. This might be the whole calendar 12 months or end in 2023, but before the top of the 12 months. Numbers are displayed rounded to 1 decimal place.
- The Kraft Heinz Company: $2.9 billion
- Exxon Mobil Corporation: $36.0 billion
- JPMorgan Chase & Co.: $49.6 billion
- Delta Air Lines, Inc: $4.6 billion
- Amazon.com Inc.: $30.4 billion
- Apple Inc.: $97.0 billion
- Tesla, Inc.: $15.0 billion
- Verizon Communications Inc.: $11.6 billion
- Albertsons Companies, Inc.: $1.5 billion
- Walmart Inc.: $11.7 billion
- Target company: $2.8 billion
- Nike, Inc.: $5.1 billion
- Blue Cross and Blue Shield: N/A
- Kaiser Permanente Inc.: N/A
Neither Blue Cross & Blue Shield nor Kaiser Permanente is a public company. The former is a network of individual state health insurers and Kaiser is a nonprofit organization. There isn’t any concept of winning just like the others on the list.
Some of the web income figures are correct, while others are incredibly far off. Some are close and seem like the results of misinterpretation of knowledge. Others are difficult to elucidate.
For some reason, Starbucks was chosen for a more detailed “analysis.” Perhaps it was thought that this might be more tangible given the implications. It might have been employees pushing for union representation and attempting to influence public opinion. Or it might have been a competitor and even an investor who desired to sell the stock. There’s no option to know.
However, it is comparatively easy to fact-check the claims. The company’s 2023 fiscal 12 months ended October 1. Net income was roughly $4.1 billion. The Annual report 2023 indicates the employment figures. 381,000 people were employed worldwide. Of those, 228,000 worked within the United States, with roughly 219,000 working in corporate branches and the rest in corporate support, store development, roasting, manufacturing, warehousing and distribution. Approximately 153,000 employees worked outside the United States, including 148,000 in company-operated stores and the rest in regional support operations.
It’s secure to assume that 219,000 people within the US are in search of suggestions. The 148,000 in company stores outside the U.S. may or may not work for suggestions, depending on local customs. But suppose for a moment that they were. That could be 367,000. Give each of them just $11,000 and the entire involves about $4.0 billion.
There has never been a $20 billion profit, let alone after that.
Were there corporations that increased their profits? Let’s take a have a look at the U.S. Bureau of Economic Analysis’s estimates of corporate earnings before taxes. The Graphic below is from the Federal Reserve Bank of St. Louis.
Growth in corporate pre-tax profits over time.
There were some strange impacts early within the pandemic as corporations closed locations and laid off employees. But the pattern seems clear. This shouldn’t be revenue that would potentially cover higher costs, but moderately profits.
This appears to be a testament to all corporations. However, watch out when nameless people reveal data about specific corporations with out a stated intention and will definitely not robotically respond by changing your investment strategies. Disinformation is available in many forms.
