Big Business Has Its Greatest Quarter EVER?!

pic credit: Modern Mechanix

Filed under: totally unbelievable headlines that are even less believable once you actually dig into the truth behind the big fancy headline.

Does anyone else believe corporate America just celebrated its most successful quarter on record? Yeah, me neither. And it's pretty clear why these numbers shouldn't be trusted at face value (which you, dear JDA reader, already know not to do no matter where the numbers come from) but let's go there anyway just in case there is any confusion.


American businesses earned profits at an annual rate of $1.659 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or noninflation-adjusted terms.

The government does not adjust the numbers for inflation, in part because these corporate profits can be affected by pricing changes from all over the world and because the government does not have a price index for individual companies. The next-highest annual corporate profits level on record was in the third quarter of 2006, when they were $1.655 trillion.

Cue the chart porn:

Does this mean that American business is booming? Not at all. It means that these numbers are not inflation-adjusted, for one, and do not really shed much light on where these profits are coming from, meaning international arms of American companies account for much of this boom. It also doesn't clarify that American workers are being whip-cracked to increase productivity while costs have been driven down thanks to mass layoffs (fewer workers to pay = more money to call "profit").

So really this is meaningless data and should simply be ignored. Nothing is as it seems in... the Twilight Zone.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Anonymous said...

American businesses earned profits at an annual rate of $1.659 trillion in the third quarter

Isn't that just about the same amount as the annual federal deficit? Printing and borrowing our way to prosperity, baby.

W.C. Varones said...
chairmanben said...

Time to outsource the printing to China.