The Federal Reserve Bank of St. Louis reports that U.S. corporate profits have reached near-record highs since the onset of the COVID-19 pandemic, both in nominal terms and as a share of national income. This surge is primarily attributed to domestic nonfinancial industries, with significant contributions from sectors such as retail and wholesale trade, construction, manufacturing, and health care. The increase in profits has been driven by enhanced productivity and operational efficiencies, rather than financial sector gains or international dividends.
What’s Driving the Surge in U.S. Corporate Profits?
Federal Reserve Bank
Ricardo Marto
Research
7 Pages
Key Takeaways
Domestic nonfinancial industries lead profit growth: Sectors like retail and wholesale trade, construction, manufacturing, and health care have been the primary drivers of the post-pandemic increase in corporate profits.
Enhanced productivity boosts profits: The acceleration toward a digital economy during the pandemic enabled firms, particularly in retail and wholesale trade, to produce more with fewer resources, translating into higher profits.
Shareholder dividends see substantial growth: Approximately 76% of the growth in corporate profits earned by domestic nonfinancial industries post-COVID-19 has been driven by an increase in dividends rewarding shareholders.
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