Profits and Recession

Sometimes I never leave
But sometimes I would
Sometimes I stay too long
Sometimes I would
--The Motels

The Pomboy girl displays US corporate profits as a % of GDP. She observes that in past instances where profits cycle back down from highs and hit 7% on the way back, two things have happened. One is that profits went on to drop another 2% on average. Two is that recessions have ensued an average of 7 months later.

Per friday's revisions, BEA now shows domestic profits have plunged to 7% of GDP. When they did that in 1979, 1989, 2000 & 2007, they went on to drop another 2 ppts, on average. Not surpris'ly, eco recession ensued--(an avg. 7 mo's later). That wld put us @ Oct. pic.twitter.com/xjqWWuOz4n

— steph pomboy (@spomboy) July 31, 2019

The BEA has just revised profits earlier this yr to 7%. That projects a recession window on the fall season.