http://www.nytimes.com/2007/08/04/business/04charts.html
August 4, 2007 Off the Charts Bulging Profits in U.S. Often Originate Overseas By FLOYD NORRIS
AMERICAN companies have been very profitable in recent years - but not necessarily because of the American economy.
Government estimates indicate that profits of companies operating in the United States - whether American or foreign - have risen at an average annual rate of 7 percent in the current decade.
That is not bad, and in fact is slightly higher than the gains of the 1980s or 1990s, as shown in the accompanying charts. The figure is lower than the 7.5 percent rate of the 1970s, but it is worth remembering that these figures are not adjusted for inflation, which was higher then.
But government figures also indicate that the profits of American companies from their overseas operations have been growing at a much faster pace of 13.7 percent in the current decade, nearly twice the rate in this country.
To some extent, such figures may be questioned because some companies arrange their operations to maximize profits in low-tax jurisdictions. But they also reflect the strength of the economy in much of the world, particularly Asia.
In recent years, there have been frequent comparisons of overall profits of American companies with the wages of American workers - and the profits have appeared to be doing much better. But the figures are distorted by inclusion of the overseas profits, and thus may overstate the differential.
One chart with this article shows domestic profits - the profits made by companies in America, regardless of where the company is based - as a percentage of the country's gross domestic product. Next to it is a chart showing the percentage of G.D.P. that goes to wages and salaries of workers in private industry.
At its recent peak in the third quarter of 2006, the share going to profits was 10.1 percent, the highest since 1968 but well below the peak of 11.7 percent reached in 1966. In the first quarter of this year, the latest figure available, the figure was down to 9.2 percent, which may reflect the slowing of the American economy.
The share going to workers - based on figures that include neither benefits nor the employer's Social Security contributions - hit a 10-year low of 34.2 percent in the second quarter of last year, but has since edged back above 35 percent in the first two quarters of this year. Business seems to have weakened, but so far few companies have cut back on employment.
Another chart shows the percentage of profits of companies based in the United States that came from other countries. In the 1960s, when the American economy was much less open to the world, about 7 percent of profits came from overseas. By this year's first quarter, that share was up to 29 percent.
The figures that have really soared to unprecedented heights are the ones that may be most important to investors - the cash sent out to them by companies. The government reports that in the first quarter of 2007, dividends and share buybacks equaled 5.1 percent of G.D.P., twice the proportion during the late 1980s.
The figure is still below the 5.4 percent recorded in the last quarter of 2004, but that number was an aberration caused by Microsoft's payment of an extraordinary dividend of $32 billion.