U.S. corporate profits have increased 21.3% in the past year and now account for the largest share of national income in 40 years, the Commerce Department said Thursday.
Strong productivity gains and subdued wage growth boosted before-tax profits to 11.6% of national income in the fourth quarter of 2005, the biggest share since the summer of 1966.
For all of 2005, before-tax profits totaled $1.35 trillion, up from $1.16 trillion in 2004 and just $767 billion in 2001.
Meanwhile, the share of national income going to wage and salary workers has fallen to 56.9%. Except for a brief period in 1997, that's the lowest share for labor income since 1966.
It's not that no one is making any money in this expansion. When an economy grows over 3% for a few years, someone is doing well. The current problem is corporations are making money, but instead of passing these gains onto employees in the form of higher wages, they are instead passing on gains barely higher than inflation and socking away the rest.
According to today's revised 4th quarter GDP report, total corporate profits increased 14.5% in the 4th quarter of 2005, up 21% from year ago period. Total corporate profits were $1.031 trillion in 2001 and $1.478.9 trillion in the 4th quarter of 2005. That's a total inflation adjusted increase of 30.89% and a compound annual growth rate of 6.9%.
Over the same period (2001-2005), non-supervisory wages have increased an inflation adjusted 2.04%, or a compound annual growth rate of .5%.
Where's the trickle down again?