This is an update to an earlier post and is inspired by the discussion going on over at Retirement Blues in this post.
December 7, 2007
Forgive me for saying so, but isn't economic softness and intensified competition a rather bad combo for continued fat corporate profits?
In hindsight, the question I asked in December 2007 (the official start of the recession) had quite the answer.
As seen in the following chart, I'm thinking of asking that very same question again. Go figure.
The charts are slightly different because I'm using after tax profits instead of total profits. The conclusion is the same. Danger!
Here's a bonus question. Why does it cause so much pain for us to revert to the median? (This is a rhetorical question with just a hint of sarcasm.)
In any event, reversion to the median is generally just a matter of time and I see no reason to think why this time would be any different.
Corporate Profits Revisited
St. Louis Fed: Custom Chart
Friday: GDP, Chicago PMI, Consumer Sentiment, Pending Home Sales - The following important older post on inflation from Professor Krugman explains why I follow various measures of underlying inflation: Core Logic [T]he ide...
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