Fact of the Day: In 2012, Corporate Profits Hit Record 11.1 Percent Of GDP

Corporate Profits - Percent of GDP - Quarter 3, 2012It might only be four years and change since the worst economic downturn since the Great Depression, but you wouldn’t know it if you looked at corporate profits of late. In the 3rd quarter of 2012, corporate profits hit an all-time high of 11.1% of Gross Domestic Product (GDP). This is at the same time that the unemployment rate is still nearly 8%, and wages are stagnant or worse.

It also coincides with Republicans saying taxes are too high and the only way to stimulate growth in the economy is to give further tax cuts to the people and the companies who least need them. When it comes to wages and profits, it’s pretty simple actually. As Robert Brusca, economist with FAO Research, put it, “If one gets bigger, the other gets smaller.”

You should also know that according to Seeking Alpha, the historical average for corporate profits is 6% of GDP. With corporate profits at $1.75 trillion, that 5 point spread from the historic average translates to hundreds of billions of dollars padding the bottom-line instead of wages. Oh, and about those wages, they dropped to a historic low of 43.5% of GDP.

But go ahead, keep drinking the conservative Kool-Aid. Keep believing the only way we get better jobs, better wages and a better economy is by giving more tax cuts to corporations and the wealthy at the same time they are raking in the dough.

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