Corporate Profits in the GDP Accounts

Rosemary MarcussDeputy DirectorBureau of Economic Analysis

Economic Statisticshellipfrom Theory to PracticeNational Association of Business Economics

Kissimmee Florida May 2004

wwwbeagov

Profits Get Extensive Media Attentionbull But what does this tell us about the economy

wwwbeagov

Why BEA Profits

bull There is a need for a measure of corporate profits consistent with other macroeconomic measures in BEArsquos ldquoUS economic accountsrdquo

bull BEA measure Profits from Current Production (called ldquoCorporate Profits with IVA and CCAdjrdquo)ndash Measures income earned by corporations from current production

before tax liabilityndash Excludes financing flows and capital gains and lossesndash Values inventory withdrawals at current cost (adjustment called the

ldquoIVArdquo)ndash Estimates economic depreciation at current cost (adjustment called the

ldquoCCAdjrdquo)

wwwbeagov

US Economic AccountsGross Domestic Income (GDI) Gross Domestic Product (GDP)

7157

14

1528

7

0

20

40

60

80

100

Employee CompensationPersonal Consumption

Investment

Govt and Net Exports

Taxes on Production

Corporate Profits 8

Gross Operating Surplus (Capital Income)

36

wwwbeagov

An Eye on GDP Components

-20

0

20

40

60

80

71

1519

10

-14

Personal Consumption

InvestmentGovernment

Exports

Imports

wwwbeagov

How are Corporate Profits Used

bull By Wall Street to track overall US corporate financial health

bull By industry analysts to track industry financial health

bull By macro forecasters to project investment in plant and equipment

bull By government policy-makers to project tax receipts

wwwbeagov

There are Lots of Profits Reportsbull Each corporation reports its profits in two different

waysndash To the public to inform investors and ndash To the IRS to report income for tax purposes

bull BEA uses that information when it creates the US economic accounts In particular it creates an economy-wide consistent-over-time measure of total profits earned by all corporations

wwwbeagov

Corporate Profits Reported to the Public bull Annual financial statements follow

standards that emphasize consistency over time for each corporation

bull Flexibility allowed on methods and measures

bull Outside audits required to curb exploitation of flexibility

bull Uniformity across corporations is low

wwwbeagov

Corporate Profits Reported to the IRS bull Both public and privately-held

corporations file tax returns which are confidential

bull Little-to-no flexibility allowed on methods and measures

bull Tax rates income definition and incentive provisions change diminishing consistency over time

bull Statistical sample provides an economy-wide profits measure with a lag

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Profits Get Extensive Media Attentionbull But what does this tell us about the economy

wwwbeagov

Why BEA Profits

bull There is a need for a measure of corporate profits consistent with other macroeconomic measures in BEArsquos ldquoUS economic accountsrdquo

bull BEA measure Profits from Current Production (called ldquoCorporate Profits with IVA and CCAdjrdquo)ndash Measures income earned by corporations from current production

before tax liabilityndash Excludes financing flows and capital gains and lossesndash Values inventory withdrawals at current cost (adjustment called the

ldquoIVArdquo)ndash Estimates economic depreciation at current cost (adjustment called the

ldquoCCAdjrdquo)

wwwbeagov

US Economic AccountsGross Domestic Income (GDI) Gross Domestic Product (GDP)

7157

14

1528

7

0

20

40

60

80

100

Employee CompensationPersonal Consumption

Investment

Govt and Net Exports

Taxes on Production

Corporate Profits 8

Gross Operating Surplus (Capital Income)

36

wwwbeagov

An Eye on GDP Components

-20

0

20

40

60

80

71

1519

10

-14

Personal Consumption

InvestmentGovernment

Exports

Imports

wwwbeagov

How are Corporate Profits Used

bull By Wall Street to track overall US corporate financial health

bull By industry analysts to track industry financial health

bull By macro forecasters to project investment in plant and equipment

bull By government policy-makers to project tax receipts

wwwbeagov

There are Lots of Profits Reportsbull Each corporation reports its profits in two different

waysndash To the public to inform investors and ndash To the IRS to report income for tax purposes

bull BEA uses that information when it creates the US economic accounts In particular it creates an economy-wide consistent-over-time measure of total profits earned by all corporations

wwwbeagov

Corporate Profits Reported to the Public bull Annual financial statements follow

standards that emphasize consistency over time for each corporation

bull Flexibility allowed on methods and measures

bull Outside audits required to curb exploitation of flexibility

bull Uniformity across corporations is low

wwwbeagov

Corporate Profits Reported to the IRS bull Both public and privately-held

corporations file tax returns which are confidential

bull Little-to-no flexibility allowed on methods and measures

bull Tax rates income definition and incentive provisions change diminishing consistency over time

bull Statistical sample provides an economy-wide profits measure with a lag

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Why BEA Profits

bull There is a need for a measure of corporate profits consistent with other macroeconomic measures in BEArsquos ldquoUS economic accountsrdquo

bull BEA measure Profits from Current Production (called ldquoCorporate Profits with IVA and CCAdjrdquo)ndash Measures income earned by corporations from current production

before tax liabilityndash Excludes financing flows and capital gains and lossesndash Values inventory withdrawals at current cost (adjustment called the

ldquoIVArdquo)ndash Estimates economic depreciation at current cost (adjustment called the

ldquoCCAdjrdquo)

wwwbeagov

US Economic AccountsGross Domestic Income (GDI) Gross Domestic Product (GDP)

7157

14

1528

7

0

20

40

60

80

100

Employee CompensationPersonal Consumption

Investment

Govt and Net Exports

Taxes on Production

Corporate Profits 8

Gross Operating Surplus (Capital Income)

36

wwwbeagov

An Eye on GDP Components

-20

0

20

40

60

80

71

1519

10

-14

Personal Consumption

InvestmentGovernment

Exports

Imports

wwwbeagov

How are Corporate Profits Used

bull By Wall Street to track overall US corporate financial health

bull By industry analysts to track industry financial health

bull By macro forecasters to project investment in plant and equipment

bull By government policy-makers to project tax receipts

wwwbeagov

There are Lots of Profits Reportsbull Each corporation reports its profits in two different

waysndash To the public to inform investors and ndash To the IRS to report income for tax purposes

bull BEA uses that information when it creates the US economic accounts In particular it creates an economy-wide consistent-over-time measure of total profits earned by all corporations

wwwbeagov

Corporate Profits Reported to the Public bull Annual financial statements follow

standards that emphasize consistency over time for each corporation

bull Flexibility allowed on methods and measures

bull Outside audits required to curb exploitation of flexibility

bull Uniformity across corporations is low

wwwbeagov

Corporate Profits Reported to the IRS bull Both public and privately-held

corporations file tax returns which are confidential

bull Little-to-no flexibility allowed on methods and measures

bull Tax rates income definition and incentive provisions change diminishing consistency over time

bull Statistical sample provides an economy-wide profits measure with a lag

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

US Economic AccountsGross Domestic Income (GDI) Gross Domestic Product (GDP)

7157

14

1528

7

0

20

40

60

80

100

Employee CompensationPersonal Consumption

Investment

Govt and Net Exports

Taxes on Production

Corporate Profits 8

Gross Operating Surplus (Capital Income)

36

wwwbeagov

An Eye on GDP Components

-20

0

20

40

60

80

71

1519

10

-14

Personal Consumption

InvestmentGovernment

Exports

Imports

wwwbeagov

How are Corporate Profits Used

bull By Wall Street to track overall US corporate financial health

bull By industry analysts to track industry financial health

bull By macro forecasters to project investment in plant and equipment

bull By government policy-makers to project tax receipts

wwwbeagov

There are Lots of Profits Reportsbull Each corporation reports its profits in two different

waysndash To the public to inform investors and ndash To the IRS to report income for tax purposes

bull BEA uses that information when it creates the US economic accounts In particular it creates an economy-wide consistent-over-time measure of total profits earned by all corporations

wwwbeagov

Corporate Profits Reported to the Public bull Annual financial statements follow

standards that emphasize consistency over time for each corporation

bull Flexibility allowed on methods and measures

bull Outside audits required to curb exploitation of flexibility

bull Uniformity across corporations is low

wwwbeagov

Corporate Profits Reported to the IRS bull Both public and privately-held

corporations file tax returns which are confidential

bull Little-to-no flexibility allowed on methods and measures

bull Tax rates income definition and incentive provisions change diminishing consistency over time

bull Statistical sample provides an economy-wide profits measure with a lag

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

An Eye on GDP Components

-20

0

20

40

60

80

71

1519

10

-14

Personal Consumption

InvestmentGovernment

Exports

Imports

wwwbeagov

How are Corporate Profits Used

bull By Wall Street to track overall US corporate financial health

bull By industry analysts to track industry financial health

bull By macro forecasters to project investment in plant and equipment

bull By government policy-makers to project tax receipts

wwwbeagov

There are Lots of Profits Reportsbull Each corporation reports its profits in two different

waysndash To the public to inform investors and ndash To the IRS to report income for tax purposes

bull BEA uses that information when it creates the US economic accounts In particular it creates an economy-wide consistent-over-time measure of total profits earned by all corporations

wwwbeagov

Corporate Profits Reported to the Public bull Annual financial statements follow

standards that emphasize consistency over time for each corporation

bull Flexibility allowed on methods and measures

bull Outside audits required to curb exploitation of flexibility

bull Uniformity across corporations is low

wwwbeagov

Corporate Profits Reported to the IRS bull Both public and privately-held

corporations file tax returns which are confidential

bull Little-to-no flexibility allowed on methods and measures

bull Tax rates income definition and incentive provisions change diminishing consistency over time

bull Statistical sample provides an economy-wide profits measure with a lag

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

How are Corporate Profits Used

bull By Wall Street to track overall US corporate financial health

bull By industry analysts to track industry financial health

bull By macro forecasters to project investment in plant and equipment

bull By government policy-makers to project tax receipts

wwwbeagov

There are Lots of Profits Reportsbull Each corporation reports its profits in two different

waysndash To the public to inform investors and ndash To the IRS to report income for tax purposes

bull BEA uses that information when it creates the US economic accounts In particular it creates an economy-wide consistent-over-time measure of total profits earned by all corporations

wwwbeagov

Corporate Profits Reported to the Public bull Annual financial statements follow

standards that emphasize consistency over time for each corporation

bull Flexibility allowed on methods and measures

bull Outside audits required to curb exploitation of flexibility

bull Uniformity across corporations is low

wwwbeagov

Corporate Profits Reported to the IRS bull Both public and privately-held

corporations file tax returns which are confidential

bull Little-to-no flexibility allowed on methods and measures

bull Tax rates income definition and incentive provisions change diminishing consistency over time

bull Statistical sample provides an economy-wide profits measure with a lag

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

There are Lots of Profits Reportsbull Each corporation reports its profits in two different

waysndash To the public to inform investors and ndash To the IRS to report income for tax purposes

bull BEA uses that information when it creates the US economic accounts In particular it creates an economy-wide consistent-over-time measure of total profits earned by all corporations

wwwbeagov

Corporate Profits Reported to the Public bull Annual financial statements follow

standards that emphasize consistency over time for each corporation

bull Flexibility allowed on methods and measures

bull Outside audits required to curb exploitation of flexibility

bull Uniformity across corporations is low

wwwbeagov

Corporate Profits Reported to the IRS bull Both public and privately-held

corporations file tax returns which are confidential

bull Little-to-no flexibility allowed on methods and measures

bull Tax rates income definition and incentive provisions change diminishing consistency over time

bull Statistical sample provides an economy-wide profits measure with a lag

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Corporate Profits Reported to the Public bull Annual financial statements follow

standards that emphasize consistency over time for each corporation

bull Flexibility allowed on methods and measures

bull Outside audits required to curb exploitation of flexibility

bull Uniformity across corporations is low

wwwbeagov

Corporate Profits Reported to the IRS bull Both public and privately-held

corporations file tax returns which are confidential

bull Little-to-no flexibility allowed on methods and measures

bull Tax rates income definition and incentive provisions change diminishing consistency over time

bull Statistical sample provides an economy-wide profits measure with a lag

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Corporate Profits Reported to the IRS bull Both public and privately-held

corporations file tax returns which are confidential

bull Little-to-no flexibility allowed on methods and measures

bull Tax rates income definition and incentive provisions change diminishing consistency over time

bull Statistical sample provides an economy-wide profits measure with a lag

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

BEA Economic not Administrative

bull Profits from Current Production arendash Unaffected by tax-law and reporting-rule changesndash Inclusive of income that escapes tax authoritiesndash Exclusive of dividends capital gains and losses and other

flows arising from means of financing productionndash Exclusive of financial adjustments reported for other

purposes such as deduction for ldquobad debtrdquo ndash Measured consistently with data beginning in 1929

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Profits are Cyclically Sensitive

$0

$200

$400

$600

$800

$1000

$1200

$1400

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

($ in billions)

Profits from Current Production

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Disposition of Corporate ProfitsIn $ Billions 20034

Profits from Current Production 1206(Corporate Profits with IVA and CCAdj)

Less Taxes 244

Equals Profits after tax 962 Of which Dividends (net) 442 Undistributed profits 520

Internally-generated corporate funds available for investment or cash flow

Undistributed profits 520 Plus Consumption of fixed capital 757 (or depreciation)

Equals Cash flow 1277 Include IVA and CCAdj

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Corporate Cash Flow A Source of Investment

$0

$250

$500

$750

$1000

$1250

$1500

$1750

$2000

$2250

$2500

70I 72III 75I 77III 80I 82III 85I 87III 90I 92III 95I 97III 00I 02III

Cash Flow Nonresidential private fixed investment

($ in billions)Corporate Cash Flow and Investment (Adjusted for Price Change)

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

SampP 500 Index Broad Measure but Differentbull Purpose to benchmark performance of

corporations in current yearbull Composition large representation of publicly-

traded corporations changing year-to-year as market values capitalization and trading activities change

bull Data base after-tax income reported on financial statements

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Similar Trend with Notable Divergence

(Indexed 1990II = 100)

Source Bureau of Economic Analysis and Standard amp Poorrsquos Inc

BEA Profits (Index) and Standard amp Poorrsquos Earnings Index

0

50

100

150

200

250

300

350

90II 91II 92II 93II 94II 95II 96II 97II 98II 99II 00II 01II

BEA Profits SampP Index

DJIASept 1998

7910

DJIAOct 2002

8048

DJIASept 2000

10968

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Data Sources Used to Estimate Profitsbull Financial-Accounting Data

ndash Census Bureau Quarterly Financial Reports (QFR)bull Available quarterly within several months of end of quarterbull Cover manufacturing mining and trade - roughly 13 of profits

ndash Data from regulatory agencies other source used to supplement QFR data

bull Tax-Accounting Datandash IRS Statistics of Income (SOI) Data

bull Corporate income-tax return (annual) databull Available with a lag of two years

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Corporate Profits Release Schedule

bull Quarterly estimates are available quickly - two months after end of quarter

bull Additional information is incorporated as it becomes available - revised estimates for the most recent three years released every summer

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

And BEA Reports on Profits

bull ldquoBusiness Situationrdquo in the Survey of Current Business

wwwbeagov

BEA Web Site has Everything

wwwbeagov

BEA Web Site has Everything

wwwbeagov

Go to Corporate Profits ldquoPagerdquo

J

l

• Corporate Profits in the GDP Accounts
• Profits Get Extensive Media Attention
• Why BEA Profits
• US Economic Accounts
• An Eye on GDP Components
• How are Corporate Profits Used
• There are Lots of Profits Reports
• Corporate Profits Reported to the Public
• Corporate Profits Reported to the IRS
• BEA Economic not Administrative
• Profits are Cyclically Sensitive
• Disposition of Corporate Profits
• Corporate Cash Flow A Source of Investment
• SampP 500 Index Broad Measure but Different
• Similar Trend with Notable Divergence
• Data Sources Used to Estimate Profits
• Corporate Profits Release Schedule
• And BEA Reports on Profits
• BEA Web Site has Everything
• Go to Corporate Profits ldquoPagerdquo