After-Tax Profits Reach Record High in Q1

by: Mark J. Perry

Corporate profits after tax (unadjusted) reached a new record high in the first quarter of 2011 of almost $1.5 trillion.

After adjustments for inventory and depreciation, after-tax corporate profits in the first quarter dipped slightly from the all-time high in the last quarter of 2010, but remained above the pre-recession peak levels of 2006 for the second consecutive month, both in nominal and real terms (see chart above). It was the seventh consecutive quarterly increase in real profits from their year-earlier level following ten straight quarters of annual declines starting in 2007, and suggests that corporate profitability has completely recovered from the effects of the 2007-2009 recession. Looking ahead, the record-level profits mean that U.S. companies now have the resources to propel the expansion forward with increased spending on capital investments and increased hiring.