Corporate profits surge to new heights

The GDP in the fourth quarter rose by 3.4%, which was higher than the recent forecasts of 3.2% and lower than the 4.9% increase seen in the third quarter, as reported by the Commerce Department. Adjusted profits after taxes reached a record high of $2.8 trillion, with profits increasing by 3.9%, exceeding expectations of 3.3%.
According to an analysis by EY economist Lydia Boussour, corporate profits saw a substantial increase in the fourth quarter, reaching a new record high. Before-tax corporate profits increased by $133 billion, the largest increase since the second quarter of 2022. Profit margins also expanded for the second consecutive quarter, reaching 12.2% of GDP due to faster productivity and stringent cost controls.
Inflation fell to 2% in the fourth quarter based on the “core” personal consumption expenditures (PCE) price index, excluding food and energy categories and the preferred inflation gauge of the Federal Reserve. New monthly core PCE data, which recorded a 2.8% year-over-year increase in January, is expected to be released on Friday.
Market commentators have praised the latest GDP readings, citing the resilience of the U.S. economy. Michelle Cluver, head of ETF portfolios at Global X, emphasized the positive trend in consumer spending and nonresidential fixed investment. The Hill’s Tobias Burns provided more insights on this topic.