Professional Documents
Culture Documents
Rosemary Marcuss
Deputy Director
Bureau of Economic Analysis
www.bea.gov
Why BEA Profits?
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U.S. Economic Accounts
Gross Domestic Income (GDI) Gross Domestic Product (GDP)
100%
80%
57%
Employee Compensation 71%
60% Personal Consumption
40%
7%
Taxes on Production
15%
20% 28% Investment
Gross Operating Surplus
(Capital Incom e)
8% 36% 14%
Corporate Profits Gov't and Net Exports
0%
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An Eye on GDP Components
80%
60%
71%
Personal
Consumption
40%
20%
19%
15% Government
Investment 10%
Exports
0%
-14%
Im ports
-20%
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How are Corporate Profits Used?
• By Wall Street, to track overall U.S. corporate
financial health.
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Corporate Profits Reported to the Public
• Annual financial statements follow
standards that emphasize consistency
over time for each corporation.
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Corporate Profits Reported to the IRS
• Both public and privately-held
corporations file tax returns, which are
confidential.
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Profits are Cyclically Sensitive
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
70:I 72:III 75:I 77:III 80:I 82:III 85:I 87:III 90:I 92:III 95:I 97:III 00:I 02:III
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Disposition of Corporate Profits
In $ Billions, 2003:4
Profits from Current Production 1,206
("Corporate Profits with IVA and CCAdj")
$2,250
$2,000
$1,750
$1,500
$1,250
$1,000
$750
$500
$250
$0
70:I 72:III 75:I 77:III 80:I 82:III 85:I 87:III 90:I 92:III 95:I 97:III 00:I 02:III
Cash Flow Nonresidential private fixed investment
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S&P 500 Index: Broad Measure, but Different
• Purpose: to benchmark performance of
corporations in current year
• Composition: large representation of publicly-
traded corporations, changing year-to-year as
market values, capitalization, and trading activities
change.
• Data base: after-tax income reported on financial
statements.
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Similar Trend with Notable Divergence
BEA Profits (Index) and Standard & Poor’s Earnings Index
(Indexed, 1990:II = 100) DJIA
350 Sept. 2000
10,968
300
250
200 DJIA
Oct. 2002
DJIA
150 8,048
Sept. 1998
7,910
100
50
0
90:II 91:II 92:II 93:II 94:II 95:II 96:II 97:II 98:II 99:II 00:II 01:II
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Data Sources Used to Estimate Profits
• Financial-Accounting Data:
– Census Bureau Quarterly Financial Reports (QFR)
• Available quarterly, within several months of end of quarter
• Cover manufacturing, mining, and trade - roughly 1/3 of profits
– Data from regulatory agencies, other source used to
supplement QFR data
• Tax-Accounting Data:
– IRS Statistics of Income (SOI) Data:
• Corporate income-tax return (annual) data
• Available with a lag of two years
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Corporate Profits Release Schedule
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And, BEA Reports on Profits
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BEA Web Site has Everything
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Go to Corporate Profits “Page”
J
l www.bea.gov