Rolling 20 Year Real Corporate Profit Growth Rate

When I make charts it's usually when I have a theory and I wish to prove it right or wrong. Most of the time, my theory is proven right. And I'm not talking like a batting average of say Christine Romer or a Paul Krugman, I'm usually right about 90%+ of the time. But this time my theory was wrong.

My theory was that because of a general decline in long term average economic growth rates as evidenced here;


Corporate profits would also be in long term decline. I also contested the general work ethic in the US economy has declined over time at all levels of management as well as innovation and creation and this would also translate into deteriorating corporate profit growth. So I did the exact same thing below as I did above. I took REAL non-financial corporate profits over time and averaged their growth rates on a "generational" basis (20 year span).

Of course I was completely wrong. Corporate profit growth had never been higher than in the past 20 years.



Now, many things can explain this. Two bubbles (housing and Dotcom) overstated corporate profit growth in the past 20 years and thus (barring another bubble) corporate profit growth would return to normal. Also, globalization where domestic companies have milked as much profit as they can from the domestic economy and now go overseas for growth in developing nations. But I truthfully don't know the answer.

The only real reason I posted this up here is because I put so much time into it, I was saying to myself, "the heck if I'm not posting this chart!"