But today, these buybacks drain trillions of dollars of windfall profits out of the real economy and into a paper-asset bubble, inflating share prices while producing nothing of tangible value. In the past, this money flowed through the broader economy in the form of higher wages or increased investments in plants and equipment. corporations spent about $700 billion, or roughly 4 percent of GDP, to prop up their share prices by repurchasing their own stock. Over the past decade, the companies that make up the S&P 500 have spent an astounding 54 percent of profits on stock buybacks. The answer is as simple as it is surprising: Much of it went to stock buybacks-more than $6.9 trillion of them since 2004, according to data compiled by Mustafa Erdem Sakinç of The Academic-Industry Research Network.

How Voters Feel About Josh Hawley’s ‘Attack on Men’ Ronald Brownstein Many public schools and our police and fire departments are dangerously underfunded. Adjusted for inflation, public university tuition-once mostly covered by the states-has more than doubled over the past 30 years, burying recent graduates under $1.2 trillion in student debt. Federal spending on economically crucial research and development has plummeted 40 percent, from 1.25 percent of GDP in 1977 to only 0.75 percent today. A $3.6 trillion budget shortfall has left many roads, bridges, dams, and other public infrastructure in disrepair. Yet despite this extra $1 trillion a year in corporate profits, job growth remains anemic, wages are flat, and our nation can no longer seem to afford even its most basic needs. economy has doubled-from an average of 6 percent of GDP during America’s post-war economic heyday to more than 12 percent today.

But in appealing to Americans’ innate sense of justice and fairness, the president unfortunately missed an opportunity to draw an important connection between rising income inequality and stagnant economic growth.Īs economic power has shifted from workers to owners over the past 40 years, corporate profit’s take of the U.S. “It’s the right thing to do,” affirmed the president. President Obama should be lauded for using his State of the Union address to champion policies that would benefit the struggling middle class, ranging from higher wages to child care to paid sick leave.

What is back stock