Corporate Profits Hit Record High
Wednesday, November 24, 2010
Unemployment may be high, but business is booming…or at least corporate profits are. New data from the Department of Commerce’s Bureau of Economic Analysis shows businesses earned profits at an annual rate of $1.66 trillion in the third quarter of this year—making it the highest figure recorded since the government began keeping track more than 60 years ago.
Since the beginning of 2009, profits have increased for seven consecutive quarters, and at times at the fastest rates in history. Compared to a year ago, third-quarter corporate profits increased 27.8%, with financial corporations doing particularly well.
With unemployment continuing to hover near 10%, companies are making do with less by not hiring new workers. This is one of the major reasons for the profit boom. The other has to do with overseas operations. Although the consumer economy may be flat in the United States, American companies and their subsidiaries are doing well in growing markets like India and China.
Corporate profits as a share of the gross domestic product (GDP) are also on the rise, and now represent 11.2% of total output, the highest since the fourth quarter of 2006.
-Noel Brinkerhoff, David Wallechinsky
Corporate Profits Were the Highest on Record Last Quarter (by Catherine Rampell, New York Times)
GDP Growth Picks Up in Third Quarter (Bureau of Economic Analysis) (pdf)
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