US Corporate Profits

Corporate profits growth in the US (defined in the national accounts as pre-tax corporate profits with inventory valuation and capital consumption adjustments) has been very muted in recent years and indeed in 2015 declined by 3.1%. Export-oriented firms have been hard-hit by the strong US dollar relative to other currencies, while the sharp decline in commodity prices hit earnings in the energy and materials sectors especially. On a q-o-q annualized basis, profits fell dramatically, by -27.7% in Q4 2015, as slow global activity eroded receipts. In April/May of this year, the profits announcements of several S&P 500 companies appear to have been dented by the ongoing slowdown in the developed world, coupled with muted GDP growth in the first three months of this year which reflects weak demand at home.

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