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Home Publications Blogs Beat the Press Floyd Norris Notices Upward Revision in Corporate Profits

Floyd Norris Notices Upward Revision in Corporate Profits

Saturday, 10 August 2013 08:07

Floyd Norris has a piece in NYT this morning reporting on the upward revision in profits in the GDP data released last month. It also notes some of the other major revisions. Good to see this being picked up.

Comments (5)Add Comment
Celebrate Profit Increases: Full Employment is Near
written by Last Mover, August 10, 2013 10:30

This is great news for America. Any economist knows more profits mean more jobs.

When profits increase they attract more firms into the industry in question. As output increases they hire more workers until full employment is achieved across all industries.

This happens exactly where profits fall back to normal levels, which happens to coincide with NAIRU, the Non-accelerating Inflation Rate of Unemployment. In laymen terms this means everyone who wants work at current wages has a job.

It's not like rising corporate profits alongside massive unemployment and miserable jobs for those who do work is consistent with Keynesian market failure at the macro level.

It's not like anti-competitive market failure at the micro level from monopolies so powerful, they monetize how many glasses of water one drinks from a hospital bed.

That's just more tripe from stupid liberals who don't understand how profits work. Listen up America, everytime profits decline jobs decline with them.

Stop biting the invisible economic hand that feeds you and applaud the profit increases. They mean America is finally moving towards NAIRU rather than away from it, when profits dropped dramatically after the govermment inspired housing bubble burst.

Be proud to be employed America. Stand your ground against the socialist shackles on profits that have threatened your economic livelihood. More mcjobs will be opening up anytime now. If you can't survive with higher wages at least you can survive with more hours.
written by skeptonomist, August 10, 2013 10:32
I revised my plot of profits/GDP with the new data:


Using quarterly data this shows better than Norris's plot how incredibly high profits have been both recently and in the bubble 2002-2006 - higher than since WW I - and what a small setback there was in 2008-9. There was only one bad quarter, last quarter 2008.

I have not been able to find a breakdown of profits by industry - maybe these data come from the IRS and are not differentiated. Who else but banking and finance would be making such profits? The military-industrial complex did not make such profits through WW II and the cold war.

Older data in blue are from the census, black is from the Fed (BEA).
written by skeptonomist, August 10, 2013 10:37
OK, oil-company profits must be contributing. This is probably the reason for the peak around 1979.
To follow on to Last Mover Insight
written by John Wright, August 10, 2013 11:06
Some years ago at a family function I was talking with the the "Tea Party" husband of a relative.

He is fond of saying "I never got a job from a poor man" when he complains about estate/income/business taxes on the well off.

Of course, he never seems to see the obvious social value of making his "rich boss" even richer by volunteering to work for less.

Maybe the USA simply needs more indoctrination so American workers understand that working for less is for the greater good.

written by skeptonomist, August 10, 2013 1:20
A large part of the increased profits seems to be from non-US operations. If this represents non-US production and sales it may be misleading to compare it with US GDP. Financial profits have also increased considerably.


Are these foreign profits being reported on US tax returns as non-US income (and thereby escaping US taxes)? Possibly the high profits are mostly an accounting issue.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.