US corporate profits jumped a record $495 billion in the 3rd quarter as the economy reopened
corporate profitssurged to a record $495.3 billion, or at a 27.1% annualized rate, in the third quarter as consumer demand bounced back and firms reopened, Commerce Department data published Wednesday showed.
- The climb comes after 12% and 10.3% declines in the first and second quarters, respectively.
- The sharp rebound in earnings joins an overall murky picture of the nation's economic recovery. While some areas including housing and consumer spending have bounced back well, labor market data including weekly jobless claims show lasting damage.
- Soaring COVID-19 case counts across the country pose a growing risk to near-term growth, and major banks have already revised their GDP forecasts lower accordingly.
Profits jumped $495.3 billion, or at a 27.1% annualized rate, over the three-month period, according to Commerce Department data published Wednesday. Domestic profits of financial corporations leaped $24.5 billion.The profit increase comes after 12% and 10.3% declines in the first and second quarters, respectively. The first-quarter decline was the largest seen since the financial crisis.
"More than ever, we should be conscious that aggregate economic figures tell but a partial story," Gregory Daco, chief US economist at Oxford Economics, said. "While a double-dip in the first quarter of 2021 seemed unlikely just a few weeks ago, it is a sad but non-negligible possibility today."The corporate-earnings data joins a slew of other indicators that, together, paint a blurred picture of the US economy's trajectory. Consumer spending climbed 0.5% in October, narrowly beating economist estimates. Yet personal incomes fell 0.7%, more than forecasted. The housing market continues to show strength, with new-home sales dipping slightly to a still-elevated 999,000 annualized pace. That reading beat the median estimate of 975,000 from economists surveyed by Bloomberg.
But the labor-market recovery stumbled again as jobless claims rose for the second straight week. New filings for unemployment benefits rose to 778,000 last week, landing handily above the 730,000 estimate. The recovery's disjointed nature suggests the coronavirus's resurgence will keep the US from staging a complete rebound in the coming months.
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