Anyway You Slice It Corporate Profits Bigger Share of Economic Pie



corporate profits after tax


Corporate profits after tax just hit a record high as a percentage of GDP, while wages are at their lows as a percentage of nominal gross domestic product.  Workers are clearly getting less and less of the American economic pie, while corporate profits continue to soar.  To illustrate how bad this is, the below graph shows wages and salaries as a percentage of GDP in red, scale on the right, against corporate profits as a percentage of GDP, in blue, scale on the left.  This is just terrible for America and American workers.


corporate profits vs wages as percentage of gdp


Corporate profits per unit also set a record.  That's not due to increased prices and because this is profits per unit, it's not an incredible in sales volume.  Nope, corporations are making out like bandits because they are squeezing workers and also cashing in on very low interest rates.



The BEA reports corporate profits in a variety of ways and it seems whatever one's focus and political predilections are implies which number they use.  Below are some of the other ways of viewing corporate profits, but anyway ya slice it, corporations are simply getting more of the American pie while workers go without.

Corporate profits with inventory valuation and capital consumption adjustments, after tax, increased 4.2% from last quarter to $1,680.2 billion and are up 7.1% from one year ago.



Corporate profits with inventory valuation and capital consumption adjustments, pre-tax, increased 3.9% from Q1 to $1,989.2 billion,and have increased 8.7% from a year ago. These are profits from current production.



Net cash flow, with inventory evaluation adjustment decreased -8.6% from Q1 to $2,064.0 billion.  This is a -6.1% change from a year ago.   These are the corporate funds available for investment according to the BEA.



Quarterly tax receipts for Q2 increased 2.6% from Q1 to $418.7 billion yet have decreased -2.6% from a year ago..










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Verizon is a good example...

WSJ: Verizon has agreed to buy out Vodafone's 45 percent stake in Verizon Wireless for $130 billion. The deal marks the third-largest announced acquisition in corporate history. Does anybody have a little cash to spare? A sweet deal for Vodafone's shareholders --- because of British law, not a penny will be owed for capital gains taxes.

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No surprise

Corporations are sitting on record high amounts of cash, which can be used for buyouts, acquisitions.

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Microsoft Buys Nokia Mobile Phones

Now this is huge, in part because Nokia at one point was the Finnish economy but on the other hand, Nokia strongly underestimated Apple, Android and severely screwed the pooch in terms of audio on demand, the key feature which propelled the iPhone (beyond the rest of the design).

That said, consolidation is always bad news in terms of consumer options and Lord help Nokia employees with MIcrosoft's very evil labor arbitrage and crap on employment practices. I kid you not, they don not hire the best and the brightest by a long shot, more they fire their best and brightest and replace them with foreign guest workers.

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