Corporate Profits Continue to Surge

Though there are still troubled spots for this economy, one sign that augurs well for our future is that corporate profits continue to grow to record levels. The federal government released its estimate of corporate profits for the third quarter last week, and reported them at an annual rate of $1.56 trillion. For the 12 months that ended in September, corporate profits increased by 11.4 percent.

That $1.56 trillion accounts for 10.3 percent of our entire gross domestic product, up slightly from 10.1 percent in the second quarter. That's an enormous share of our economy. Prior to last year, the biggest share of GDP ever taken up by corporate profits was in 1929, when they topped out at 8.98 percent. As recently as 2008, that figure was down below 7 percent.

Then, in 2010, corporate profits grew to a then-record of 9.56 percent. Their current level marks the first time ever that they have reached 10 percent of GDP. The next question will be to see what our companies intend to do with all those profits.