US corporate profits rose to a record-high-3,192.5 billion in a season-consistent annual rate in the first quarter, excluding adjustments for tax and capital expenditures and inventory appraisals, as shown in the national income and commodity account from the US Bureau of Economic Analysis (see first four). This is a 2.7 percent increase from the fourth quarter and a 17.7 percent increase over a year earlier.
U.S. corporate profit after tax and excluding adjustments for capital expenditures and inventory valuations rose to a record high of 7 2.740.1 billion, up 1.5 percent from the fourth quarter and 15.7 percent higher than a year earlier (see first chart). Despite the tight labor market and rising input costs, companies have been able to make record amounts of profit.
Measurements from the National Income and Product Accounts confirm the strong earnings per share (EPS) for the Standard & Poor’s 500. Weighted-average-per-share (EPS) earnings on a twelve-month trailing basis were $ 210.30 at the end of March, and $ 212.70 at the end of April (see first chart). This is a 38.6 percent gain compared to the level a year ago.
In addition, the profit margins of the S&P 500 are holding high. The weighted-average twelve-month trailing EPS per share in 2022 was above 13 percent of the weighted-average twelve-month trailing sales (SPS) (see second chart). It appears that companies are able to pass on their high costs to customers in order to maintain strong profit margins.
Robert Hughes
Robert Hughes joined AIER in 2013 for over 25 years researching economic and financial markets on Wall Street. Bob was previously head of Brown Brothers Harriman’s Global Equity Strategy, where he developed an equity investment strategy that combines top-down macro analysis with bottom-up fundamentals.
Prior to BBH, Bob was a senior equity strategist at State Street Global Markets, a senior economic strategist at Prudential Equity Group, and a senior economist at Citicorp Investment Services and a financial markets analyst. Bob holds an MA in Economics from Fordham University and a BS in Business from Lehigh University.