October 22, 2010 – According to last month’s GDP release, real U.S. corporate profits from current production rose by nearly 36% in the four quarters through Q2 (Chart 1).
The recent recession featured unusually sharp profit declines. Since then, we’ve also seen a remarkable rebound. However, the recovery in real profit levels was not yet complete in Q2.
During the last expansion, real corporate profits from current production reached a cycle peak of $1,595 billion in Q3 2006, measured in chained 2005 dollars (Chart 2).
By Q4 2008, they had collapsed to about 57% of that peak (to $912 billion chained 2005 dollars). That was just past the midpoint of the last recession.
Since that low, these profits have now seen six straight quarters of good strong growth. By Q2 this year, they had recovered to 92% of their Q2 2006 peak (to $1,461 billion chained 2005 dollars).
They still have another 8 percentage points (another $134B chained 2005 dollars) to go.