Friday, May 27, 2011

After-Tax Profits Reach Record High in Q1

Corporate profits after tax (unadjusted) reached a new record high in the first quarter of 2011 of almost $1.5 trillion. 

After adjustments for inventory and depreciation, after-tax corporate profits in the first quarter dipped slightly from the all-time high in the last quarter of 2010, but remained above the pre-recession peak levels of 2006 for the second consecutive month, both in nominal and real terms (see chart above).  It was the seventh consecutive quarterly increase in real profits from their year-earlier level following ten straight quarters of annual declines starting in 2007, and suggests that corporate profitability has completely recovered from the effects of the 2007-2009 recession.  Looking ahead, the record-level profits mean that U.S. companies now have the resources to propel the expansion forward with increased spending on capital investments and increased hiring. 

See also Scott Grannis' related post "Corporate Profits Remain Very Strong."


At 5/27/2011 7:20 PM, Blogger arbitrage789 said...

"record-level profits".

That's sure to attract the attention of Chuck Schumer and the "O-Man".

Did someone say, TAXES...?

At 5/27/2011 10:05 PM, Blogger Rufus II said...

Oh, Lordy, do I have to say it? :)

At 5/27/2011 10:06 PM, Blogger Rufus II said...

Did I forget? Is it my Birthday?

At 5/28/2011 2:11 AM, Blogger PeakTrader said...

Based on profit levels and tax collections, the masses are underpaid and overtaxed.

The historically slow economic recovery:

U.S. Incomes Remain Stagnant as Inflation Rises
May 27 2011

Technically, personal income rose by 0.4% during the month...But after taxes the increase was completely attributable to inflation.

Real disposable income remained essentially flat -- as it has throughout 2011.

In order to keep their spending growing, Americans are being forced to save less money.

If incomes continue to sag, then this could ensure that the recovery remains very slow. Saving has already been steadily declining, and at some point Americans might decide that they shouldn't save any less.

Pair that with zero income growth, and the very slow rise in real spending might grind to a halt.

Without additional demand, firms won't hire and unemployment will remain very high.

At 5/28/2011 3:47 PM, Blogger PeakTrader said...

Peak oil and overregulation don't help.

At 5/31/2011 2:39 PM, Blogger VangelV said...

What nonsense. Why don't we see where profits stand if we force the financial sector to use the proper accounting methods and we adjust for inflation properly?


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