American business is a beast. Here is its income statement, as of June 30, 2014[i]:
$12 trillion in sales, over the last year. The costs of doing business remain high, but even at an aggregate profit margin of 6.9%, American enterprise is generating $835B in profits[ii].
We can think of each economic sector as a subsidiary of America, Inc. Here is how they stack up.
Consumer stocks alone make up $4.2T of total sales, but margins are lower at 5.4%. Energy continues to dominate, as offshoots of Rockefeller’s original Standard Oil—Exxon and Chevron—continue to produce massive profits 155 years after the first “rock oil” was discovered in Pennsylvania.
America, Inc. continues to lead in technology, where its companies are earning an aggregate profit margin of 12.7%. Telecom and Utility stocks are much smaller “subsidiaries,” with combined sales of less than $700B, but both sport healthy margins.
America, Inc. is a quite the business: diversified, innovative, and massively profitable. This begs a question for millennials: would you rather sit in cash, or buy a slice of America Inc. ($SPY) with the click of a button[iii]?
[i] I’ve excluded financials for this post, because they don’t fit cleanly into traditional income statements. With financials included, total sales would be roughly $14T and net income would top $1T.
[ii] To be included in this calculation, a company has to be domiciled in the U.S., ADRs and other foreign stocks listing on a U.S. exchange are NOT included. I’ve excluded micro caps, but they don’t add up to much. Private companies are NOT included in these calculations
[iii] I know I always argue against home bias, and indeed I think $ACWI is a better option for total global exposure, but I am just having some fun here.