Re: surge in U.S. corporate profits

[Allin Cottrell <cottrell@xxxxxxx>]

On Thu, 20 May 2004, Rakesh Bhandari wrote:

> The profit surge also coincides with the post 2002 depreciation of
> the dollar, almost 30% against the euro though only 12% against a
> trade weighted basket of currencies...

Yes.  Another perspective on the course of profits is the Kaleckian
identity:

profit = investment + budget deficit + net exports - workers' saving

>From this point of view, comparing 2003:4 with the previous profit
peak in 1997:3, we have (all in current billions of dollars):

                            1997:3  2003:4  change
fixed private investment    1347.0  1756.0  +409.0
federal deficit               35.0   417.9  +382.9

These both boost profit, as does a fall in personal saving of 63.9.
Over the same period the U.S. current account balance has fallen by
97.6, a relatively slight offset to the big boost from private
investment and federal deficit spending.

Allin.