Revised GDP data: Profit growth remained robust in Q3-2023
|Summary
The sequential rate of real GDP growth in Q3-2023, which was originally reported as 4.9%, was revised up to 5.2%. Although growth in real PCE was tamped down a bit, growth in real fixed investment was not as weak as originally reported.
Today's release provided the first look at the income side of the National Income and Product Accounts. In that regard, real gross domestic income rose only 1.5% in the third quarter, marking the fourth consecutive quarter in which growth in real GDI has not kept pace with growth in real GDP. Wages and salaries continue to rise at a strong pace, at least in nominal terms, but elevated inflation is eroding the real value of those wage increases.
Despite weak growth in GDI, corporate profits rebounded in Q3. Pre-tax profits rose by the most in five quarters, leaving the level of profits only a stones-throw away from the recent cycle peak.
Economy-wide profit margins also improved during the quarter amid a sturdy level of end-demand offsetting a still-high cost environment.
Rebounding profits can be supportive of economic growth, but to the extent we see renewed pressure on margins in coming quarters, headcounts and thus broader growth may be at risk of slowing. Recession risks are elevated, but a downturn is far from a certain outcome particularly in an environment of rebounding profits growth.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.