[marcosportillo]

I keep hearing how corporate profits are at an all-time high. How true is this? And if it is, how is this explained considering the recession. I assumed in a recession, everything is down. Is this due to the funneling of newly printed money hitting the corporations first before the new money circulates through economy?

[jmherbener]

Corporate profits are cyclical, running up during booms and down during busts. The recent recovery in corporate profits has been influenced by Fed expansionary monetary policy.

http://research.stlouisfed.org/fred2/series/CP?cid=109

National income varies much less. So as a percent of national income, profit vary quite a bit.

http://research.stlouisfed.org/fred2/series/NICUR?cid=109

As the charts show, in Q3 2012, national income was $13,912 billion and corp. profits were $1,752 billion. So corp. profits were 12.6% of national income.

[swalsh81]

Does the corporate profit number include or exclude reinvestment? I have need numbers into multiple $trillions that is sitting in accounts waiting for some semblance of economic and tax policy stability. If corporate profit does not include reinvestment money then this number would appear higher due to money waiting to be reinvested,

[marcosportillo]

I ran the data through excel and made a graph for Corporate profits as a percent of National income:

It does look a little clearer in this regard. I guess the increase in profits have coincided with the bailouts/QE’s/OperationTwist.

The average is 6.97%. Since 2005, its been 10% or higher except for ’08 thru mid-’09. The last four quarters is the highest its ever been as a percent of National Income.

[marcosportillo]

What a coincidence, Bob Wenzel just posted this on economicpolicyjournal:

http://www.economicpolicyjournal.com/2012/12/in-charts-crony-rich-getting-richer.html

[swalsh81]

I think it would be interesting to see some charts comparing corporate profits of those who, for instance, are on the list of the big political contributers on OpenSecrets or those companies who currently have or have had in the recent past a current or former executive in a government position compared to the corporate profits of who would be considered small businesses

[maester_miller]

Not sure if this is relevant to your question, but it always amuses me when people (usually leftists) yell about “record-breaking” profits or how profits are at an “all-time high”?

Is this not a universally good thing? Companies cannot profit without selling things of value to consumers. If Apple’s profits are at an all-time high, it is because more people have Iphones than ever before. Should this not be a cause for celebration rather than condemnation?

Also, anyone who is at all familiar with business knows that growth is absolutely critical. Given this, every company everywhere absolutely intends for its profits to constantly grow, and to have “record-breaking profits” which are at an “all-time high” every quarter, and every year. While this may not be a realistic goal in the real world, it certainly could be if we were to eliminate the government interventions into the economy which create business cycles.

[swalsh81]

@SmartMuffin the reason they do this is because they start with the bad assumption that the amount of available wealth is somehow static. They seem to think that if one group (or corporation) is making record profits then another group must necessarily be suffering record losses.

I say “seem” because you wont quickly see someone admit to these assumptions but that assumption explains a good portion of their arguments.

Of course they also seem work under the idea that money is the real measure of wealth but that is even more off topic.

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