Chase dom categories 2021 q22/5/2024 ![]() ![]() Profits by financial domestic Industries rose by 2.0% in Q3 from Q2, to a seasonally adjusted annual rate of $710 billion, the second highest behind the record in Q1, and was up by 23% year-over-year. Profits from inventory are more like a capital-gain than profits from current production.ĬCAdj: The “capital consumption adjustment” converts the tax-return measures of depreciation (based on historical-cost accounting) to measures of consumption of fixed capital, based on current cost with consistent service lives and with empirically based depreciation schedules.Ĭapital gains & dividends received are excluded to show business profits from current production, rather than financial gains. IVA: The “inventory valuation adjustment” removes “profits” derived from inventory cost changes. Interestingly, the surging labor costs have so far not made a dent into these profit spikes, and they might not if companies can continue to jack up their prices faster than their costs go up, including labor costs, which is precisely how inflation is nurtured and propagated. And they’re able to do it because their customers are willing to pay those whatever-prices. ![]() Surging profitability during a period of big inflation is a sign that companies have leveraged inflation to their advantage, hiking prices much faster than their costs went up, and thereby doing their part in fueling inflationary momentum. Then there was a lull in Q1 and Q2 this year, and now it’s starting all over again: It’s based on income tax data from the IRS and on financial statement data filed with the SEC.ĭuring the surge of inflation in 20, price increases were outstripping cost increases by extraordinary margins, hence the spike in profits. The BEA’s measure of “corporate profits” broadly track profits from current production by all businesses that have to file corporate tax returns, including LLCs and S corporations, plus some organizations that do not file corporate tax returns. Overall corporate pre-tax profits (excluding the Federal Reserve Banks), jumped by 3.4% in Q3 from Q2, and by 5.5% year-over-year, to a record seasonally adjusted annual rate of $3.45 trillion, fueled by profit spikes in a number of industries whose figures the Bureau of Economic Analysis released today, and we’ll get to them in a moment. Strong demand sees to it that companies can do it. Inflation is like so not defeated? Jacking up prices faster than costs are rising creates stunning profits.
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