Corporate profits fell by $118 billion, a decline of 2.95 percent.
The BEA first-Quarter GDP Report shows a decline in corporate profits.
Key Points
- Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $118.1 billion in the first quarter.
- On a percentage basis, profits decline 2.95 percent.
- Profits increased $204.7 billion in the the fourth quarter, up 5.38 percent
Profits swing substantially, but -2.95 percent is big move. It’s the largest decline since -8.64 percent in the fourth quarter of 2020 coming out of the Covid pandemic.
Significant Revisions to First-Quarter GDP, Income Declines 0.2 Percent
Earlier today, I noted Significant Revisions to First-Quarter GDP, Income Declines 0.2 Percent
Gross Domestic Income drops, Investment higher, real final sales lower.
Superficially, that was an increase of 0.1 percentage points (an upward revision) from the advance report of -0.3 percent.
However, the BEA revised Real Final Sales from -2.5 percent to -2.9 percent. RFS is the bottom-line estimate of GDP. The difference between the base forecast and RFS is an inventory adjustment that nets to zero over time.
The BEA does not release Gross Domestic Income in the advance report. It came in at -0.2 percent.
Key Numbers
- DGP: -0.2 percent
- GDI: -0.2 percent
- Corporate profits: -2.95 percent
- Real Final Sales: -2.90 percent.
These are very recession-looking numbers. Click on the previous link for more revision details.
How about this?
NVIDIA to pay the US 15% of proceeds of chip sales to China
Perhaps this is Trump’sstore…
no correlation with profits and stock prices. unless you hold close to 20 years. this is almost nonsensical and meaningless, but we are all financial whores for information……….decade ago this site had great stock picking advice in comments. no more. i went long X today for a spec.
Additionally, what level of trust would you place in numbers from the BEA, or, for that matter, ANY government agency?
he’s a uniter (of the world vs US)
China, the countries of South-East Asia (ASEAN) and the Arab states (GCC) have just held a summit in Kuala Lumpur to forge what could become the world’s largest economic bloc, covering everything from free trade agreements and de-dollarisation to Belt-and-Road connectivity.
Together, these countries have over 2bn people, 30% of the world’s GDP and, crucially, about 55% of world GDP growth in PPP terms.
In their joint statement they agree to:
1) Massively develop free trade between them
“Promoting free trade and welcoming the full conclusion of the ASEAN-China Free Trade Area 3.0 Upgrade Negotiations, and looking forward to its early signing and entering into force, as well as an early conclusion of the China-GCC Free Trade Agreement negotiations”
2) Bypass the dollar
“Exploring cooperation on local currency and cross-border payments”
3) Belt and road expansion, for “seamless and efficient inter-connectedness”
“Promoting high-quality cooperation under Belt and Road Initiative and seamless connectivity, including through the development of logistics corridors and digital platforms”
4) Develop a cross-regional digital economy framework, including in AI
“Exploring a cross-regional framework to promote the digital economy, in areas such as digital trade, e-commerce, digital payment, fintech, artificial intelligence, start-ups and data security cooperation”
5) Energy markets coordination
“Supporting global energy market stability and adopting a balanced approach that does not exclude energy sources but instead innovates technologies that enable emissions management and efficient use of all energy sources”
In short, this could represent nothing less than the most significant realignment of global economic power in generations, bringing together 2bn people and more than half of the world’s GDP growth under a single cooperative framework.
The gathering marked the inaugural trilateral meeting between ASEAN, China and the GCC – a bloc comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Their presence underscored a shift in the global landscape, as alternative centres of influence come to the fore at a time of heightened economic tensions, driven in part by former US President Donald Trump’s threats of punitive tariffs.
https://www.intellinews.com/bertrand-asean-gcc-countries-and-china-come-together-forming-the-world-s-largest-economic-bloc-383587/?source=brunei
Excellent post, njbr.
Maybe time for another scam to kill off more small businesses.
Trump is in a league of his own when it comes to killing the economy. He is increasing the debt/deficit dramatically while destroying tax receipts. Nothing like having a corrupt, deranged narcissist at the helm of the greatest nation on earth.
His greatest accomplishments are:
Failing to build the wall and allowing millions to pour in
Bankrupting a casino
Blowing the Covid response and dragging the economy to a standstill
Injecting five trillion dollars to spur inflation to cover his blowing Covid response
Tariff on, tariff off, tariff on, tariff off idiocy.
Trump reminds me of having a spoiled toddler with a machine gun running the White House.
Margins? Gold mining companies sure have seen their margins increase. Many are sporting 200% net margins and with realized gold prices being up over $300 per ounce in the second quarter margins will rise again by over 10% (every dollar gold goes up – falls straight to the bottom line). The magnificent seven are running a paltry 40 – 70% with decreasing margins.
Nothing like having a
corruptdespised by the looney left,deranged narcissistAmerica First President at the helm of the greatest nation on earth.There! I like the sound of that a lot better, Frosty!
Sorry Ben,
Most of us prefer the truth… 😉
Trump failed to build the wall and allowed millions of illegals into the country.
Is on track to destroy the economy – AGAIN!
Became world champion at “The Blame Game”
Unicorns living rent free in your head, Frosty.
It’s okay. We won the election, so it’s our turn to govern.
Trust us M@G@ folks, you’ll live, probably a lot better than you expect.
Funny stuff Ben,
Tell me what you think of trumps failure to build the wall and allow millions of illegals to pour in?
Tell me how the math works on tariffs and who pays them?
Tell all of us why the deficit is skyrocketing again under trumps leadership?
Reality is knocking at the door and all that orange haired nercissist can do is blame others.
Trump has the house and senate and is doing nothing he promised!
Nothing!
On day one he was going to stop the wars in Israel and Ukraine. Did he? NO! it was all bullshit.
The only deals he is making are for himself and his corrupt family.
What is your favorite flavor of Trump Kool Aid?
😉
“govern”..?- Trivia time-what admin has spent the most $ in history the first 4 months—yep, this One !- Blowing away a Socialist Biden even….Which party has added more $ to our debt ??- Bingo, the republics have..MORE THAN SOCIALIZED DEMS- L THE F OUTLOUD- You should read or take a class on responding in a factual/ specific way- it seems like now you just know how to gargle ? Big if true..lol, move along little SILLY UNREAD boy
Trump must crash the economy to re-fi his assets at lower interest rates or he goes BK, yet again lol-he hates stocks and loves real estate where his family is allowed to never pay taxes- he is nothing but a Grifter and Gov Welfare baby- Fred Trump and donnie got almost a Billion in welfare handouts from NY (you can look it up unless you’re a Partisan Hack ??)-FACTS —FACTS–FACTS-ignore as you do-lol—once again a grifting POS- full stop-do not put Trump and sound business in the same sentence- makes someone sound like a real stupid mo fo C–enjoy your day 🙂
Looking at the alternative-he’s the lesser of two evil…
Too bad democratic party has been high jacked by left progressive aka domestic terrorists….
So the lasts time corporate profits were this low was when Trump was president in 2020. Who could have predicted? oh wait, I did.
“Failing to build the wall and allowing millions to pour in”
It was Biden who allowed millions to pour in, by ending Trump’s stay in Mexico policy. Democrats claimed they couldn’t stop the influx without new legislation. Trump cut the influx by 94% shortly after taking office again, without new legislation.
They will pour in funny money and pathetic AI deception to try to keep up their unearned ascendancy as they are devoured by reality.
TACO donald could have been saved by the trade court for his idiotic tariff tantrum. the appeals court now puts them back into effect. poor TACO. back to being the schizo.
Flat real retail sales and falling profits (worse than -3% adjusted for inflation)…and a surging stock market. Am I the only one confused?
STOCKS and economy have never had a correlation. unless the holding period is 2 decades or so.
The stock market is the casino of the rich people.
lots of stupid middlebrows are obviously invested for the past century too, old sport.
1M SPX,QQQ… flopped in March. The trend is down, until it flips, perhaps today.
1M June(C) might drop to 5.500/5,600. It’s a different count.
Profit declined by almost 3%, but what’s more important is how profit margins performed. This info will be released at the end of June.
Since early in the pandemic unit value added profit margins have hovered around 18%, a significant rise from 12% in the 2010s and 2% for the period 1950-1975. Profit per unit of real gross value added of nonfinancial corporate business: Corporate profits after tax with IVA and CCAdj (unit profits from current production) (A466RD3Q052SBEA) | FRED | St. Louis Fed
Since real retail sales have been flat recently, a decline in profits may signal an end to corporate America’s ability to general profits via price increases instead of volume. Personally I see this as a healthy sign.
Excellent comment
I sure hope so
It appears that profit levels are returning to the lower baseline they had before the covid measures flooded the economy with cash if I read your chart correctly. It may well be a return to a more healthy economy.
Profit per unit jumped since 2020 to its highest level. Who produced it. Demand for highly skilled and skilled workers will rise. A flat, or a lower profit per unit margin is a shift from a small number of businesses to workers and other businesses. It’s a Systemic shift from the gov to the private sector and a Systemic shift from the mag 7 to other businesses and especially to small and midsize businesses which employ most workers.
Profit per unit is up 18 cents. A great comment in a pile of poisonous garbage.
This may be why Trump thinks companies can eat the tariffs rather than passing on to the consumer because profit margins are higher than historical standards.
And to make America great again everyone needs to do with less including less profits. So America embraces communism so everyone has an equal share. How nice. /s
The longer we go without a recession, the further & longer companies will be able to pass along price increases, whether they really exist or not.
Here’s a great example from Home Depot who’s raised prices extraordinarily over the last 3 years. It’s just breath taking as to what you’re paying for the little things, sub $10, compared to pre-COVID.
Nashua Tape: $28 per 50 yd roll
Nashua Tape: $14 per 50 yd roll when purchased as an 8 pack
Some bean counter or AI algo figured out that 98% of the sales for this item is one roll at a time, so let’s double the price. But the exact same item when purchased Costco style hasn’t budged in terms of price per roll.
Home Depot and Lowes can get away with this, because they’ve eliminated the competition. Nowadays, if I don’t need something immediately that Home Depot sells, I purchase it on Amazon. A great example is zip ties. You can easily get 2-3 times the quantity from Amazon and usually for a little less money than what HD sells their much lower qty.
Home Depot is the perfect example of “we jack up the prices, because we just can.”
Nope. Due to the K-shaped consumer spending, businesses will continue to gouge until they can’t any longer. You see an analogous situation in the housing market right now. Home prices are so high, that only 20% of the population can qualify for a mortgage. That said, the 20% of potential buyers are so price insensitive in their purchasing behavior, that the sellers refuse to lower prices.
The Federal Reserve *really* blew it with their price stability mandate because they didn’t understand what it meant. Now they understand, but they can’t take back their bad decisions that have already destroyed the economy.
I like the “K shaped” descriptor for consumer spending. Fact is, The Wealthiest 10% of US Households Now Represent Nearly 50% of Consumer Spending – RetailWire
The affluent is the cohort that accounts for most of mortgage debt outstanding. This cohort has seen their incomes rise at the same time as there have been substantial declines in the real value of their mortgage debt and of their debt service payments, much of which bears an interest rate of only 3% in the first place.
Bottom line: the wealthiest and most affluent are likely to continue to spend…irrespective of rising prices, which are at most slightly annoying to them.
Given these dynamics it will be amazing if corporations can’t just keep raising prices. Nonetheless the decline in profits is hopeful…if it’s not mostly attributable to declining oil prices.
It gets worse: the median age of homebuyers rose to a record-high 56 years old in 2024. I like Mish’s question about whether inflation expectations affect spending habits, “Do people go out and buy two coats instead of one because of expectations?” Well, I don’t know if the top 20% are buying two houses instead of one house (or 3, or 10) due to expectations, but the top 20% are certainly buying more than their “fair share”, and it is showing up clearly in the data.
PS Many of my friends are wealthy, and they think they are ” doing good” with their price insensitive spending beacause it “trickles down”. Nothing could be further from the truth.
– Corporate profits decline: 2.95 percent. > Now that doesn’t sound so bad, does it?
– Key Point: It’s the largest decline since the fourth quarter of 2020. > Sounds like it was overdue?
>> With Rents Up, Housing Up, Autos Up, Insurance Up, Medical Up, Food Up, Entertainment Up, Quite frankly Everything UP, Did anyone honestly believe in a different outcome? Perhaps Corporate Profits will come much closer in line with what’s called “Reality” and prices might fall, when the sellers realize they have out priced the market, for there Products. “Stay Even, or Go Broke” perhaps is the general expectation out there in the “Did You / Can You Spend It? World”
And yet, the chowderheads on CNBC party on like it’s 1999.
Doom & gloom “broken clock” bears haven’t been right about a damn thing since 2008 and missed a ~900% rally in the S&P over the past 15 years. So who’s the chowderhead? There’s never going to be a big stock crash ever again. The post-Great Recession and Covid-era actions/policies are witness to that. Nosebleed valuations are the new normal. You don’t have to like it or agree, but to invest against the grain is a losing bet.
Never bet against a government bailout?
Zero Hedge was the worst offender for spreading doom and scaring people from investing after 2008. I stopped going to ZH a long time ago (10+ years)
On a long enough timeline, everything goes to infinity if it’s priced in dollars.
gold has been the best investment of the 21st century so far. hands down. same for the 20th century.
Pretty sure NVidia investors would disagree with you.
Same with bitcoin and other digital assets.
Lots of other tech companies also up orders of magnitude more than gold.
KGB
like saying some rare gold coin went 100x more than bullion. like you bought 100percent nividia in your stock portion of your net worth. too fucking stupid and funny. gold has beat all major investments 21st century by far. and nobody pays taxes on gold sales. only dummies.
ZH was posting Covid calamity in China six month before the official announcement in US…Had I processed info. correctly, I would’ve been invested in Covid vax. pharma….
Many make 6-Figures, so they can…
6 figures isn’t much after taxes if you are a family man.
usd are like old italian lira. everyone i know is a millionaire. even the village idiots of my youth.
you mean wall street salesmen are bullish? wow. i never would have guessed. like the 3 card monty fellas of my youth on 42nd street.
The first full quarter on Trump’s Turdonomics™ and profits fall. Anyone with a functioning brain could see this coming an election away. If the trend continues for Q2 and Q3, everyone will wish they had SPY PUTS.
The money train is pulling into the station, we just need the TACO to do what he does best.
Hmm… Last I checked, a quarter was 25%, and a Presidential Term, even for Trump, is “4 Years” So 4Y-3Y= 1Y or 1Q or 25% OR In 1 Year we can check on your Stats that your referring to, or “Trumps First Quarter” in office…
A quarter = 3 months in financial corporate terms dummy.
You’re simply not that bright are You? When speaking about Presidents and their term in office, their effects in office and what they leave behind is ALWAYS and has ALWAYS been measured in “Years” and Not Quarters.
1’st YEAR is the “Honeymoon Period” and measures what was accomplished there first sitting year in office and it follows each YEAR,
Until the Last Year. Which is then referred to as their Legacy (ALL 4 Years Combined).
This is nothing knew since we have had Presidents…
I don’t know anybody that doesn’t like tacos. They are delicious. When I read taco my stomach growls. Using it as an acronym might work in some quarters but anyone who likes Mexican food likes tacos. It is true that I never saw tacos or burritos at investment banking lunches and dinners so maybe they associate them with low class but normal people don’t. I find it curious that Democrats want to use that as an insult. It’s a nothingburger.
TRUMP ALWAYS CHICKENS OUT. MORE CHICKEN THAN TACO. OR PERHAPS CHICKEN TACOS. IT’S FUNNY. LIGHTEN UP OLD SPORT.
Hispanics are 20% of the US population. If the Democrats want to use an derogatory acronym for Trump that happens to also be one of their favorite dishes then I say go for it.
taco a derogatory term? bwaaaaaaaahhhhhhhh. you dumbfuck woke amerikan. never change. i love the idiocracy. and cult anus licking too. keep it up. please. for my entertainment.
I think you meant to say it’s a nothingTACO but to each their own. The fact that it triggered you is delicious all on its own.
exactly. too fucking funny.
Nice to see Mish is sticking to economics and has stopped his law career in perdicting tariffs by President are illegal. Fastest stay in history. The answer to decreased profits is liquidity tightening. The money hose is off so the deluge is turned into a trickle. Just wait for deflation. It is coming and watch profits tumble.
What a hoot.
Stay is both expected and meaningless.
I intend to discuss.
Trump will lose in June on appeal, and the SC may decline the case.
if you have any confidence in your statement, that is funny. if you know you don’t know, that makes sense. i know, i do not know. TACO donald the schizo potus of idiocracy empire.
That’s vs. IEAA or whatever the acronym is. There are other trade laws which can and will be used, as detailed by one of your astute readers, and also in a GS piece I believe. So it will not “stop the tariffs.” Clearly I’m discounting the inability of congress to get its head out of its rear end.
What’s Driving the Surge in U.S. Corporate Profits?April 21, 2025
https://www.stlouisfed.org/on-the-economy/2025/apr/whats-driving-surge-us-corporate-profits
So does this portend a Fed cut in rates soon – or are they boxed in by inflation?
I thought so after the court killed the tariffs, but now the appeals courts has reinstated them – so, who knows….
Fed is getting boxed in by the bond market and government spending.
Yet, executive pay, bonuses and other perks are at record highs with some layoffs the offset.
For 2024: “The median pay package for CEOs rose to $17.1 million, up 9.7%. Meanwhile, the median employee at companies in the survey earned $85,419, reflecting a 1.7% increase year over year.”
I remember the media hype a while back about all the “huge raises” people were getting. Some people are still getting them. Others, not so much.
I agree and recall at times, when I got a large Bonus, I quickly realized How Large the Big Bonuses I never saw were!! 10-20% on 1M Vs, 100K just isn’t the same…
When you consider the Profits made already, why chase, when you can simply move on? Take what’s left to grab onto in Bonuses, and any Cash you can get in other ways, and walk away unscathed.