Figure C
Historically, profit shares fall, not rise, when the economy is running hot: One-year change in profit share and the four-quarter average of the unemployment gap
| Unemployment gap | Profit share change |
|---|---|
| -1.97 | -0.66 |
| -1.26 | -0.88 |
| -1.13 | -0.90 |
| -0.92 | -1.18 |
| -0.77 | -1.05 |
| -0.58 | -0.47 |
| -0.37 | -1.00 |
| -0.20 | -0.44 |
| -0.04 | -0.32 |
| 0.15 | -0.13 |
| 0.33 | 0.08 |
| 0.48 | 0.51 |
| 0.62 | 0.73 |
| 0.78 | 0.36 |
| 0.97 | 0.37 |
| 1.21 | 1.11 |
| 1.47 | 0.60 |
| 1.95 | 1.14 |
| 2.44 | 1.09 |
| 3.23 | 1.62 |
Note: Author’s analysis of data from the Bureau of Labor Statistics (unemployment), the Congressional Budget Office (natural rate of unemployment), and the BEA NIPAs (profit share of the corporate sector). Binned scatterplot of regression on four-quarter change in the profit share on the four-quarter average of the unemployment gap, with controls for recessions and business cycle dummy variables.
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