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.