Profit rose 38% year-on-year for companies in the S&P 500 during the second quarter according to the Wall Street Journal. Q2’s profit level was also 10% higher than in 2008, though revenue was 6% lower.
This is very much a function of weaker low-margin businesses going by the wayside, as higher margin businesses pick up the slack, and cost-cutting of course.
What’s striking is that as major stock market indices remain well below its past highs, after-tax profits for all U.S. companies hit the near-record level of $1.208 trillion during Q2.
As a result, companies are taking home the highest share of national income since 1947 as shown by the WSJ graphic below. This is because while corporate profits have rebounded very fast, the U.S. worker and smaller businesses have lagged. The hope is that smaller companies and Americans will recover in a lagged fashion.