Corporate profits in the third quarter posted at $1.872 trillion, up from $1.821trillion the prior quarter. Profits in the third quarter increased an annualized 11.5 percent, following a gain of 8.5 percent in the second quarter. Profits are after tax but without inventory valuation and capital consumption adjustments. Corporate profits on a year-on-year basis increased 5.8 percent versus 5.3 percent in the second quarter.
Corporate profits are derived from the national income and product accounts and are expressed in several measures. Econoday's focus is on the most relevant measure for the total economy, after-tax profits.
Why Investors Care
Corporate profits are key in the determination of a company's stock price. When corporate profits are rising, then stock prices will likely rise; when profits are falling, then equity prices will probably decline as well. Corporate profits are one of the more volatile series on a yearly basis. Profits are the residual - the left over - from revenues after expenses are taken out - and taxes for after-tax corporate profits. While each component (revenues, expenses, and taxes) is not that volatile, the net is.
Data Source: Haver Analytics