New data suggests corporate profits are not as strong as they appear.

Companies have continued to report that profits have increased in 2018. Per an article in the WSJ, the companies that comprise the S&P 500 realized profit growth of 26.3% over the prior quarter in Q1. But there is reason to be skeptical:

“…a Commerce Department measure of corporate profits … showed that profits rose by just 0.1% in the first quarter from a year ago. Take away the tax-cut benefit, and the numbers were worse: Before accounting for the benefits of the tax cut, profits were down by 6%. These numbers are the only ones that show the impact of the tax cut, which created a divergence of the pre- and post-tax numbers.”

The author concedes that this only applies to one quarter of data, but it’s a trend worth watching.

corporate profits
Source: Justin Lahart | "Corporate Profits Boosted in Early 2018 by Tax Cut" | The Wall Street Journal | 05/30/2018 | Visit