On November 23, the Bureau of Economic Analysis updated its analysis of U.S. corporate profits. After-tax corporate profits from current operations hit their highest level, $1.221 trillion, since the beginning of this data series, 1947:Q1 (see Chart 1). Relative to GDP, after-tax corporate profits were 8.28% in Q3:2010, down a basis point from Q2:2010 (see Chart 2). The average percentage of after-tax profits to nominal GDP from 1947:Q1 through 2010:Q3 is 5.97. The record high percentage during this period was 8.61%, reached in 2006:Q3. Chart 3 shows that profit margins in the nonfinancial corporate sector are rising and are 91.3% of their post-WWII high of 0.150, set in 2006:Q3.

Chart 1

Chart 2

Chart 3

I report, you decide.

Happy Thanksgiving,

Paul Kasriel is the recipient of the 2006 Lawrence R. Klein Award for Blue Chip Forecasting Accuracy