[ARCHIVE] Make Your Move

Corporate Profit Blues

June 25, 2014

Corporate profits in the US took a nose dive in the first quarter of 2014. While this doesn’t indicate recession, plan on a milder rate of growth and a softer second half to your year if you are positively correlated to the economy.

Alan Beaulieu Blog

Corporate profits in the US took a nose dive in the first quarter of 2014 according to the Bureau of Economic Analysis (www.bea.gov). Profits in the first quarter of 2014 came in 3.0% below the first-quarter of 2013 and a steep 9.8% below the fourth-quarter-2013 figure. The 9.8% drop is the second steepest in the last 65 years (only 1982 provided for a worse first quarter result). Other than that you have to go to 1959 to see a similar onset of profit decline. Those dates do not bode well for the 2014 economy, but they are consistent with our forecast of slower growth in the US in the second half of 2014.

I realize it will be tempting for a lot of people to blame the poor profit performance on weather. Even if that is the case, it doesn’t change the fact that the profits year-over-year comparison has been in general decline since March 2012. The decline in the year-over-year comparison (12/12 rate-of-change) is a negative signal for employment, the stock market, and Nondefense Capital Goods New Orders. In this case, negative does not mean recession, but I suggest you plan on a milder rate of growth and a softer second half to your year if you are positively correlated to the economy.

About the Author

Alan Beaulieu Blog | President

One of the country’s most informed economists, Alan Beaulieu is a principal of the ITR Economics where he serves as President. ITR predicts future economic trends with 94.7% accuracy rate and 60 years of correct calls. In his keynotes, Alan delivers clear, comprehensive action plans and tools for capitalizing on business cycle fluctuations and outperforming your competition--whether the economy is moving up, down, or in a recession.

Since 1990, he has been consulting with companies throughout the US, Europe, and Asia on how to forecast, plan, and increase their profits based on business cycle trend analysis. Alan is also the Senior Economic Advisor to NAW, Contributing Editor for INDUSTRYWEEK, and the Chief Economist for HARDI.

Alan is co-author, along with his brother Brian, of the book MAKE YOUR MOVE, and has written numerous articles on economic analysis. He makes up to 150 appearances each year, and his keynotes and seminars have helped thousands of business owners and executives capitalize on emerging trends.

Prior to joining ITR Economics, Alan was a principal in a steel fabrication company and also in a software development company.