Weekly Economic Report 7.31.26

It is that time of the quarter, when we can first estimate profits from the National Income and Product Accounts – and this one is a doozy. We believe domestic corporate profits soared at a 37% annual rate in the second quarter, and were up 20% from a year ago – reaching a staggering 12.9% of GDP, up 0.5% from the prior strong level. This does not match the estimated heights of 39% annual growth in S&P500 profits, but it also does not contain contributions from unrealized capital gains on investments in other companies. Second quarter NIPA operating profits popped because nominal GDP was up at a torrid 7.9% annual rate – and in the corporate sector, we estimate 10.6% -- while compensation rose at just 3.7% for both. Nonfarm proprietors’ income also posted its best growth in two years, rising at a 6.1% annual rate in the second quarter – with an 0.9% rise in June, after a 1.4% jump in May.

EU07-31-2026.pdf

Download PDF • 229KB