Wages have dropped nearly 8 percent since 2006

[Jesus Malverde]

27. Firms' Profits Rise to Record High, Outpacing GDP Growth

U.S. corporate profits hit new highs last year, driven by the tight lid firms have kept on hiring and spending almost five years into the economic recovery.

A closely watched measure of after-tax corporate profits rose to $1.9 trillion in the final three months of the year, the Commerce Department said Thursday. Corporate profits stood at 11.1% of gross domestic product, up a bit from the prior quarter.

The latest uptick underscored a factor that has dogged the economy since it emerged from recession: Many companies are guarding their cash rather than putting it back into the economy in the form of new hiring.

"Companies are continuing to squeeze productivity gains out of existing workforces," said Dan North, chief economist at credit insurer Euler Hermes ELE.FR +0.04% Americas. Many businesses continue to keep a tight grip on spending amid uncertainty about the economic outlook at home and abroad, he said.

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