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Day 25/07/2011

Weathering the economy’s soft patch

Kate Linebaugh and James R. Hagerty, Business Abroad Drives U.S. Profits, Wall St. J., July 25, 2011, at B1:

While the U.S. economy is struggling, U.S. corporations aren’t. A third of the way through the second-quarter reporting season, earnings at companies in the Standard & Poor’s 500-stock index are the highest in four years, according to S&P analyst Howard Silverblatt, who predicts the second half will be even stronger. Yet there is little indication that the strong results will jump-start the U.S. economy and get the millions of Americans idled by the recession back to work…. Corporate profits — one of the few areas of strength in the limp U.S. recovery — appear to be weathering the economy’s soft patch.

According to a study by Northeastern University economists titled The ‘Jobless and Wageless Recovery’ From the Great Recession of 2007-2009, “corporate profits captured 88 percent of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1 percent.”

But “even as the economy limps along, more of the nation’s wealthier families are cutting out the car ride and chartering planes to fly to summer camps” according to Christine Haughney, To Reach Simple Life of Summer Camp, Lining Up for Private Jets, N.Y. Times, July 25, 2011, at A1:

Gov. Paul LePage of Maine happened to be waiting for his flight at Augusta State Airport on a recent Saturday when the weekend crush began.

A turboprop Pilatus PC-12 carrying Melissa Thomas, her daughter, her daughter’s friend and a pile of lacrosse equipment took off for their home in Connecticut, following the girls’ three-week stay at Camp All-Star in nearby Kents Hill, Me. Shortly after, a Cessna Citation Excel arrived, and a mother, a father and their 13-year-old daughter emerged carrying a pink sleeping bag and two large duffel bags, all headed to Camp Vega in Fayette.

“Love it, love it, love it,” Mr. LePage said of the private-plane traffic generated by summer camps. “I wish they’d stay a week while they’re here. This is a big business.”

More on LePage’s economic ideas here.