Company After Company Reporting Record Profits As U.S. Economy Reopens
AILSA CHANG, HOST:
Throughout the pandemic, the message has been that once the virus is under control, the U.S. economy is going to come roaring back. And that is largely true for corporate America. Company after company has been reporting record profits, and they're telling investors they're optimistic about the year ahead. But as corporate America soars, there are some confusing signs in the labor market. Employers say they can't find workers, while unemployment numbers remain high. We're going to talk through some of this now with NPR's David Gura.
DAVID GURA, BYLINE: Hey, Ailsa.
CHANG: So let's start with these huge company profits. What have you been seeing in the first part of this year?
GURA: Yeah, they've been doing incredibly well. And I want to be clear here. We're talking about big, publicly traded companies. We're not talking about mom-and-pop businesses, many of which have been struggling over the last 14 months. But the word we keep hearing and seeing over and over again is record - record income, record profits, record sales. And I should say this has not been confined to one sector or one kind of company. Let's start with banks - of course, the bedrocks of the U.S. economy. Goldman Sachs reported record profits, so did JPMorgan. Interest rates are low right now. They've been making deals.
Communication companies and tech companies also have been doing really well. Apple saw record sales across the board for things like laptops and iPads. Facebook and Alphabet - that's Google's parent company - They've also set records. You know, during the pandemic, most of us have spent a lot of time online. That's led to a huge uptick in digital advertising. And Tesla, another company that's done really well, it reported record-setting income in the first few months of the year and delivered more new vehicles than analysts expected.
CHANG: OK - record, record, record. What does all of that tell us about the overall health of the economy, you think?
GURA: Well, there is a lot of optimism. That is something that stands out right away when you read these earnings reports or you listen to executives on calls with investors. This kind of reinforces what we've been seeing in the economic data. Now, we are in the middle of this big transition, and we're seeing that in the numbers that have been coming out. There were way fewer jobs created last month than economists expected. But take a step back, recognize where we are. This has been a bruising year. And now, with vaccinations and businesses reopening, things feel different. There's been this shift in sentiment.
And what companies are telling us reflects that optimism about the future, but also how over the last year, many of them have benefited from how we've been living our lives, which have changed pretty dramatically - working at home, learning at home, buying a lot of stuff at home. That's been good for Amazon, which reported record profits at the beginning of the year. And because we haven't gone anywhere, many of us have gotten kind of tired of where we live. Maybe the kitchen's looking a little tired. We feel like we could use some more space. That's led to a surge in renovations, which has led to a spike in demand for lumber and other building supplies. One company, Mohawk Industries, says it sold a record amount of laminate flooring at the beginning of this year.
CHANG: Wow. OK. So even though a lot of companies seem to be doing really well, I take it there's still some stuff to worry about. Let's talk about that.
GURA: Yeah, shortages, for one thing. Supply has not kept up with demand. And companies have said it's going to take longer for us to get products, including furniture. Raw materials are also getting more expensive, metals and plastics. Executives have mentioned this, and they've warned about what it could mean longer term. Jill Hall is an equity strategist at Bank of America.
JILL HALL: The mentions of inflation on corporate earnings calls are up around 800% year over year. So the average company is mentioning inflation a lot more.
GURA: Just a fascinating statistic. There is concern that prices are going to go up and they'll stay up, which could mean the Fed Reserve might raise interest rates sooner. Now, we have heard from some companies that they are raising prices. Procter & Gamble says some of its products will get more expensive, including diapers. The cost of a can of coke is going to go up. And Whirlpool says you should expect to pay more for a washing machine or a dryer. Tomorrow morning, we're going to get an update of the consumer price index. That measures inflation. It's going to give us a sense of just how much prices are popping.
CHANG: OK. So, David, what does all of this mean for workers in the U.S., ultimately?
GURA: The government released new hiring data today for the month of March, so there's a little lag. But in March, there were more than 8 million jobs opened. That's a record. But employers only hired 6 million workers. Companies are struggling to find workers. That's especially true among retailers. A big question here is - companies are making record profits, are wages going to go up? So far, they have not gone up. And there are still far fewer jobs than there were before the pandemic.
CHANG: That is NPR's David Gura.
Thank you, David.
GURA: Thanks, Ailsa.
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