Corporate Olympics: Profit Sprint vs. Investment Crawl
Private-sector investment intentions are only 1.3% higher this year, a far cry from the growth of after-tax corporate profits. Yesterday, Statistics Canada reported that net profits were 17.3% higher in the fourth quarter of 2013 than in the fourth quarter of 2012.
While construction investment is expected to stagnate, the bright spot is that companies plan to invest 3.9% more in machinery and equipment in 2014. But even that increase is not particularly impressive compared to the growth of corporate profits.
Continued weak private-sector investment confirms that no-strings-attached corporate tax cuts are not working and should be reversed. The additional revenue could be used to fund needed public-sector investment.