Corporate Profits Surge To Record High In Q2
Corporate profits in the second quarter (both nominal and inflation-adjusted) reached all-time record highs during the April-May period of this year, according to today’s BEA report on GDP and corporate profits for the second quarter (see chart above). Real GDP growth in the second quarter was revised down from the previous estimate of 1.3% to 1%, based on more complete data. While overall economic growth remains weak as measured by real GDP, the record level of corporate profits shows that American companies are financially healthy and strong, and can easily weather the current spring-summer “soft patch.”
Compared to the cyclical low of $770 billion in the fourth quarter of 2008, real corporate profits have almost doubled to the current record level of $1,540 billion, which confirms the fact that corporate profitability has made a full recovery from the effects of the Great Recession. Based on post-war history, the U.S. economy has never experienced a recession that is not preceded by sharp declines in corporate profits, so I think we can safely say we’re definitely not headed for a double-dip recession in the near future.