4Q Corporate Profits Fall $1.1 Billion, 6% Annually

Profits from current production — corporate profits with inventory valuation adjustment and capital consumption adjustment — fell $1.1 billion in the fourth quarter (4Q) 2017.

That compares to an increase of $90.2 billion in the third quarter (3Q). Profits of domestic financial corporations decreased $14.6 billion in the 4Q juxtaposed to an increase of $47.8 billion in the 3Q.

From the Bureau of Economic Analysis (BEA):

Profits of domestic nonfinancial corporations rose $19.4 billion, compared with an increase of $10.4 billion. Rest-of-the-world profits decreased $5.9 billion, in contrast to an increase of $32.0 billion. In the fourth quarter, receipts increased $14.9 billion, and payments increased $20.8 billion.

In 2017, profits from current production increased $91.2 billion, in contrast to a decrease of $44.0 billion in 2016. Profits of domestic financial corporations increased $15.7 billion, in contrast to a decrease of $2.0 billion. Profits of domestic nonfinancial corporations increased $37.4 billion, in contrast to a decrease of $51.7 billion. The rest-of-the-world component of profits increased $38.0 billion, compared with an increase of $9.8 billion.

The 2017 Tax Cuts and Jobs Act includes several provisions that impact the business income and personal income statistics in the national income and product accounts (NIPAs). The provisions do not impact corporate profits for current production or GDI but do impact net cash flow in the fourth quarter of 2017.