Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Not a Starbucks Issue

July 30, 2012 By E.J. Smith

In a Wall Street Journal front page report, Starbucks CEO Howard Schultz hit the nail on the head regarding corporate profits.

Coffee chain Starbucks last week warned that customer traffic in U.S. cafes began slowing in June. The softness continued in July, so the company cut its earnings guidance for the third quarter.

“This is not a Starbucks issue,” said Howard Schultz, chief executive. “This is a macro problem of weak consumer confidence.”

Corporate profits as a percent of GDP have been at unsustainable levels. You can see on my chart below that profits peaked out in the fourth quarter of 2011 at 9.8% of GDP, and are now headed back toward trend. That number has dipped to 8.9% of GDP, even while GDP growth has dropped to 1.5% in the most recent report.

There are few places left for already lean corporations to cut costs. Any increase in profits from here on out will have to come as a result of increasing sales, something that looks increasingly less likely given the turmoil in Europe, slowing Asian demand and the lackluster consumer confidence mentioned by Schultz.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Merry Christmas from Young Research
  • Lawmakers, Guns and Money
  • Will You Run Out of Money in Retirement?
  • Author
  • Recent Posts
E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com
Latest posts by E.J. Smith (see all)
  • Nowadays, Everyone Is Getting Some Dividend Religion - May 25, 2022
  • How to Avoid the Restrictions of a Target Date Fund - May 24, 2022
  • Watch Out for Your Worst Enemy - May 23, 2022

Search Young Research

Most Popular

  • MARKET CHAOS: This May Take Time, Here’s How to Prepare
  • MARKET TURNING: Canada's Housing Market Turmoil
  • Your Survival Guy: “Sell in May, Buy After Labor Day?”
  • PRICES SOAR: Diesel Shortage Could Cripple America's Economy
  • The Power of a Compound Interest Table
  • All-Powerful Money Managers Voting YOUR Money Targeted by Senate GOP
  • Institutional Investors Fall in Love with Oil, Again
  • BULLWHIPPED? Inventory Overhang Could Slow Growth in Certain Sectors
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • BUY THE DIPS? Can You Catch a Ginsu Knife?

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Harvard Professor Calls Homeschooling a “Threat to Society”
  • Biden IGNORES Americans’ Pain at the Pump, Touts “Green Transition”
  • The Virtue of Trump Supporters vs. Antifa and ESG Investing is Like This…
  • Why Does Joe Biden Put Americans Last?
  • PRIMARIES: Watch GOP Voter Turnout Tonight
  • The Supreme Court Must Always Protect the Constitution
  • Our Daily Bread Threatened?
  • Watch Out for Your Worst Enemy
  • Farmer Tells Steve Bannon Biden’s Inflation Is Ruining His Business
  • PARTY’S OVER JOE: Republicans Crush Democrats in Local Elections

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.