A rather anemic recovery

Corporate Profits After Tax, CP, percentage change, measured quarterly, reported annually starting January, 2000

The amount of money a business entity has left after all costs have been paid – corporate profits after tax – indicates the overall health of the economy. As these profits grow then businesses are expanding, hiring new workers, and investing in infrastructure.

The chart above shows Corporate Profits After Tax (CP, black line, percentage change, measured quarterly but expressed at an annual rate) from January, 2000 to the present. This period of time captures the last two recessions, allowing us to make comparisons for each. Since The Great Recession ended in June 2009, we’ve seen corporate profits grow at an annual rate of 2.9%. Compare to the growth in corporate profits after the Early 2000′s recession ended, where growth of 5.4% was observed.

In other words, the growth in corporate profits is only 54% of the rate observed during the Early 2000′s recession. Very, very anaemic and doesn’t bode well for the economy going forward.

And the stock market you ask? The one they say is hitting new highs every week? Might be a tad overpriced.

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