The Sickening Plunge in Corporate Profits

Here is the evolution of labor compensation and corporate after-tax profits over the past 9 quarters:

Total labor compensation:  $8315.3b.  —->  $9049.5b.  Up 8.8%

After-tax corporate profits:  $1184.6b.  —->  $1099.5b.  Down 7.2%

So why have workers been doing so much better than corporations in recent years?  And why did corporate after-tax profits plunge from $1.3 trillion in 2013 Q4 to $1.1 trillion in 2014 Q1?

I know what you are thinking.  ”I don’t believe those numbers.  Where did you get them?”  I got them from the BEA.  And I don’t believe them either.  And that’s why I don’t believe that nominal GDI fell 1.4% rate in Q1.  Because if you look at components of gross domestic income, you get the following:

Compensation plus depreciation (reliable data):  Up at a 3.7% rate in Q1.

That’s more than 2/3rds of national income.  So basically the unusual (1.4%) plunge in NGDI was a story of plunging corporate profits.  I know of no other data confirming that plunge. Stock prices are soaring.  Corporations have been reporting very strong earnings.  If someone can find non-government data supporting the claim that workers are far outperforming corporations in recent years, I’d love to see the evidence.

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