Profits eroded throughout corporate America during the fourth quarter.
The Bureau of Economic Analysis yesterday said corporate profits fell $250.3 billion, or 16.5 percent, between the third and fourth quarters. They dropped $18.5 billion, or 1.2 percent, between the second and third quarters.
At $1.26 trillion, pre-tax corporate profits haven’t been this “low” since the third quarter of 2004 when they were $1.22 trillion. Their all-time high of $1.71 trillion in the third quarter of 2006 seems very far away.
As with most economic statistics, it’s the direction that matters and corporate profits have declined for six straight quarters.
The vaporization of profits in the financial sector is also evident from the report. (Yes, the sector did have profits in the fourth quarter.) The $122.4 billion in financial-sector profits for the fourth quarter was the lowest since the $226.8 billion in the third quarter of 2001.
Among the nonfinancial sectors, manufacturing recorded the biggest decrease in profits. Within manufacturing, motor vehicles continued to be the only sector that had operating losses - $28 billion in the fourth quarter.
For all of 2008, corporate profits declined 10.1 percent. Profits had decreased 1.6 percent in 2007.