3rd Quarter GDP Disappoints, Corporate Profits Keep Rising

Posted on November 22, 2011

The Bureau of Economic Analysis reported that its second estimate of  third quarter GDP growth rose at a seasonally adjusted annual rate of 2.0 percent. This was lower than the consensus estimate of 2.4% as investment in private inventories, spending on non-durable goods and services were revised lower from their advance estimates.  Not surprisingly, government consumption expenditures were also revised lower.

Corporate profits expressed as a percentage of GDP rose to 1.97 billion, or 14.8% of GDP in the third quarter compared to 1.93 billion, or 14.6% of GDP in the second quarter. Despite weak GDP growth there is no stopping the growth in the profitability of the US multi-nationals. When the final number is released in December I will publish a more extensive piece that will focus on historical changes in the components of GDP. Well also see how close we are to achieving Grover Norquist’s dream of going back to a time in US history our government operated on 8 percent of GDP.  

Corporate Profits As a Percentage of GDP

US Gross Domestic Product (GDP)
  Previous Qtr Current Qtr
Real GDP Quarter-to-Quarter 1.3% 2.4% 2.0%
Corporate Profits as a % of GDP 14.60%   14.83%