Corporate Profits After Tax (without IVA and CCAdj)FRED
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For the past two decades, corporate profits have grown at a faster rate due to excessive government deficits, Zero Interest Rate Policy (ZIRP), and Quantitative Easing ( QE ). However, this prolonged growth has not been without its hiccups. There were two major corrections, one in 2008 to 2009 which resulted in a 63% drop in corporate profits and a severe recession, and the other from 2014 to 2016 where the S&P 500 remained relatively stagnant with a market decline of almost 20%.
We are on the brink of another correction, and markets have already started to plummet even before corporate profits start to show signs of weakness. This is a cause for significant concern. Despite the abundance of bottom fishing being carried out by supposed "experts" on social media.
With all that being said, I must acknowledge that corporate profits have remained more resilient than I anticipated. I attribute this to effective overall management. However, relying solely on cost-cutting measures is not a sustainable approach to prosperity.
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As expected!
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"Better than expected" is not better. Back in FEB I warned corporate profits would fall. Here we are in June and you can now all see the analysis was once again bang on!
Another Great Call!
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US Corporate Profits Fall the Most Since Q4 2020
Corporate profits in the United States declined by 5.9 percent to USD 2.329 trillion in the first quarter of 2023