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May 25, 2006: Another Stellar Quarter for Profit Growth
Highest Share Since 1967

Data released by the Bureau of Economic Analysis (BEA) today show that in the first quarter of 2006 corporate profits claimed the largest share of gross domestic income (GDI) since the 1st quarter of 1967, 39 years ago (see figure below). Since the last business cycle peak (the first quarter of 2001), the share of GDI going to corporate profits has risen by 4.5 percentage points, while the share going to labor compensation has fallen by two percentage points. The growth of profits over the past few years stands in stark contrast to the wages and incomes of many in the middle class.  For example, the typical (i.e., median) worker's weekly paycheck is down two percent in real terms over the recovery (2001q1-2006q1). If corporate profits' share of GDI had remained stable at the average level that characterized the run of the entire last business cycle, there would be almost $400 billion available today for increased labor compensation.

This brief analysis was was written by EPI economists Jared Bernstein and Josh Bivens.

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