August 30, 2023

Corporate profits from current production (corporate profits before tax with inventory valuation and capital consumption adjustments) fell by $11 billion in the second quarter which works out to an annualized rate of decline of 0.4% after after having declined 4.1% in the first quarter.  During the last year profits on this basis have declined 6.5%.  The IVA and CC adjustment deals with the difference in depreciation allowances used for accounting and income tax purposes.

Corporate profits have been falling for the past three quarters as the impact of the Fed’s rate hikes begin to bite.  At the same time, the reluctance of firms to lay off workers despite slower economic activity will be a negative factor for profits for some time to come.  Eventually, firms will have to start laying off bodies.

Stephen Slifer


Charleston, SC