Corporate profits hit record highs in the fourth quarter of last year, contributing to the overall strength of the U.S. economy. The supercharged bottom line of America’s biggest companies may have helped boost the entire country’s economy, keeping people employed, and averting a recession.
The U.S. economy has been showing signs of recovery from the pandemic-era slumps. Inflation is decreasing, unemployment remains below 4%, and GDP is growing at a healthy pace. The Commerce Department even revised its fourth-quarter annualized GDP growth rate, increasing it to 3.4% from 3.2%.
These positive economic indicators have translated into soaring profits for America’s biggest companies. The last quarter of 2023 was the most profitable of the year, with corporate profits after taxes reaching $2.8 trillion, a $105 billion increase from the previous quarter, according to the Commerce Department’s data. Corporate profits accounted for about 10% of the total quarterly GDP, slightly lower than in the first three quarters of the year.
While some consumer and worker advocates have criticized corporate profits, labeling it as “greedflation” contributing to economic challenges and pushing up the cost of living, one top economist disagrees. According to Mark Zandi, chief economist for Moody’s Analytics, corporate profits played a crucial role in preventing massive layoffs and sustaining the economy.
Overall, the surge in corporate profits has been a topic of debate, with contrasting views on its impact on the economy. While frustrations about pricing and the cost of living persist, the role of corporate profits in supporting employment and economic stability cannot be overlooked.
