E US Corporate Profits Soared Last Year, In Nominal Terms And As A Percentage Of GDP

Corporate profits in the United States rose sharply in 2018, reaching an all-time high of $2,076.8 billion in the third quarter.

However, the strength of corporate profits should also to be viewed as a percent of the economy i.e. GDP. This measure is important for a variety of reasons, including the implication it has on the distribution of income and wealth in the country.

In other words, this relative indicator of the performance of corporate profits should be important to investors, corporations and government policymakers.

As one can see from the data since 2014, the corporation profits/GDP ratio dropped from a 12.3% high in 2014 to a low of 10.7% at the end of 2015.

Since early in 2016, however, profits have been expanding faster than the economy, and the process accelerated in 2018 with the profits/GDP ratio reaching 11.2% in the third quarter. 

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(Click on image to enlarge)


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