Corporate profits in the second quarter grew to an annualized $1.383 trillion from $1.370 trillion in the prior quarter. Profits in the second quarter were up an annualized 3.8 percent, following a 54.1 percent surge the prior quarter. Profits are after tax but without inventory valuation and capital consumption adjustments. Corporate profits are up 38.7 percent on a year-on-year basis, compared to up 50.8 percent in the first quarter.
| Definition |
Corporate profits, as reported by the Bureau of Economic Analysis (BEA), are summarized briefly as the income of organizations treated as corporations in the national income and product accounts. The BEA reports several measures of profits. Profits from current production (corporate profits with inventory valuation and capital consumption adjustment), are also known as operating or "economic" profits. Capital consumption adjustment deals with the differences in depreciation allowances used for accounting and income tax purposes. Inventory valuation adjustment (IVA) deals with the difference in measuring the cost of inventory replacement. Book profits amount to operating profits subtracting out inventory valuation and capital consumption adjustments. After tax profits are book profits after taxes are subtracted. The Econoday reports will focus on after tax profits reported by the BEA, since these are the most relevant.
The corporate profit figures that are derived from the national income and product accounts (NIPA) depend on GDP growth. They don't always move in the same direction or the same magnitude as the profit data reported directly by individual companies or even the S&P 500. Why Investors Care