US GDP figures were revised down last Friday to -1% annualised growth from -0.1% on the first estimate. This was mainly due to inventories. Inventory depletion contributed -1.62% points to growth, compared with the advance estimate of -.57% pts. In other words, American businesses reduced production and ran down their stocks of unsold goods in early 2014 instead to meet demand. The consensus view is that businesses will have to restock this quarter and so the US growth rate will pick up now that the terrible winter is over. We shall see.
Even more interesting was the data released on profits. US corporations have enjoyed an explosion in profits since the Great Recession ended. Corporate profits as a share of GDP reached all-time highs (both before and after tax) in 2013. But in the first quarter of 2014, that changed.
Before tax corporate profits in Q1 fell absolutely on a…
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