Corporate profits hit a new record high in 2021
Corporate profits hit another record in 2021, though the breakneck pace of growth slowed sharply during the fourth quarter.
Why it matters: This shows that companies have been able to overcome the inflationary wave flowing through the U.S. economy — and even profit from it.
State of play: Companies complained loudly about rising costs for raw materials and labor for most of 2021, but data released yesterday by the Commerce Department show that they passed those costs along — and then some.
- For the full year 2021, pre-tax profits rose 25% to roughly $2.81 trillion, handily outpacing the 7% rise in consumer prices over the same stretch.
Yes, but: But the pace of growth slowed sharply in Q4, as profits inched up only 0.7% from Q3 (to an annualized pace of $2.94 trillion) — which could mean that the long-awaited pinch on profits from higher prices is starting.
What to watch: Another earnings season kicks off in a few weeks.
Go deeper ... Mapped: America under $15/hour