profit rate falling!

Doug Henwood dhenwood at panix.com
Mon Mar 15 16:31:46 PST 1999


More bulletins from the data front....

Profit rates (pretax profits divided by the value of fixed capital, both from the flow of funds accounts) for U.S. nonfinancial corporations, which recovered from their early 1980s lows (3-4%) and risen steadily into the mid-1990s, peaked in 1996 at 8.3%, and have fallen back to 7.5% in 1998. The recovered rate is/was no match for 1950s and early 1960s rates of 10-12%, but a doubling is nothing to be sneezed at. On a chart, the last few years look like the peak/rolling over in the profit rate around 1996, the year of the first post-WW II credit crunch and the apparent overripening of the Golden Age boom. Of course, this could just be a cyclical squiggle, and the profit rate (by these disgracefully bourgeois measures, I admit) will burst to new highs on a millennial upswing.

Doug



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