[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-321723-105":59,"doc-detail-321723-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","economiccommentary-profit-measures-how-good-are-corporate-earnings","ECONOMICCOMMENTARY - Profit Measures - How Good Are Corporate Earnings?","","Corporate profits reported from current production may appear weak or strong depending on measurement, because after-tax reported profits of nonfinancial corporations have grown sluggishly while after-tax economic profits have grown much faster. Reported profits measure receipts minus tax-reported expenses and depreciation, whereas economic profits adjust for price changes and depreciation allowances on a replacement-cost basis. The slowdown in reported profit growth is linked to slowing inflation and tax-law changes, plus accelerated depreciation and declining inflation profits.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/economiccommentary-profit-measures-how-good-are-corporate-earnings/321723/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/economiccommentary-profit-measures-how-good-are-corporate-earnings/321723.png","ImageObject",300,407,{"name":92,"@type":93},"Eliana","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-12","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",13,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"Why can corporate earnings look weak or strong depending on the measure?","Question",{"text":113,"@type":114},"Reported profits and economic profits rely on different accounting treatments. Reported profits reflect historical cost expense measurement and tax reporting, while economic profits adjust for price changes and depreciation on a replacement-cost basis.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"What is the key cost-side difference between reported and economic profits?",{"text":118,"@type":114},"Measuring expenses is problematic when prices are not stable. Reported profits use conventional accounting that records transactions at historical costs, which biases results during sharp price changes.",{"name":120,"@type":111,"acceptedAnswer":121},"What factors explain the recent reduction in reported profit growth?",{"text":122,"@type":114},"Slowing inflation and changes in tax laws in 1981 account for much of the reduction. Reported profits also grow more slowly due to increased use of accelerated depreciation and the decline of inflation profits with more moderate price increases.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},321723,1790013422,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":105,"preview_page_count":4},4398048949847,"https://ap-avatar.wpscdn.com/avatar/400002536579ef2da7f?_k=1778318612642679267","# ECONOMICCOMMENTARY\n\nRecent corporate profits from currentproduction could be viewed as weak orstrong,depending on how they aremeasured.On the one hand,after-taxreported profits of nonfinancial corpora-tions have indeed been sluggish,increasing at a 14 percent annual paceover the current expansion.This issubstantially below the 20 percentannual rate of growth,on average,forreported profits in post-Korean Warrecoveries.On the other hand,numberscan be deceiving,and reported profitsare not the most accurate indicator ofearnings from current production.Reported profits are simply the differ-ence between total receipts and totalexpenses which include \"depreciation\"as reported for tax purposes.Economicprofits,which adjust reported profitsfor price changes and depreciationallowances,are generally thought to bea better gauge of corporate perfor-mance.In contrast to reported profits,after-tax economic profits of nonfinan-cial corporations have been strong inthe current expansion,growing at a 45percent annual pace,which far exceedstheir average annual rate of 19 percentin previous expansions.  \nAn examination of after-tax reportedand economic profits of nonfinancialcorporations over the last three decadesshows that reported profits were notmuch different from economic profitsuntil the inflationary 1970s,when  \nPaul R.Watro is an economist at the Federal Re.serve Bank of Cleveland.The author is grateful toJohn Ercegand Martha Scanlon for theircommentsand to John McElravey for his research assistance.  \nThe views stated herein are those of the authorand not necessarily those of the Federal ReserveBank of Cleveland or of the Board of Governors ofthe Federal Reserve System.  \nreported profits surpassed economicprofits.That trend has reversed,andeconomic profits have surged ahead ofreported profits.The slowing in thepace of inflation and 1981 changes intax laws account for much of thereduction in reported profit growthover the last few years.  \nAfter-tax economic profits have beenbolstered by theexpansion in economicactivity and slower increases in costsand taxes.Modest gains in wages andsalaries helped firms keep the lid onoperating costs in recent years.Moreover,since taxes are based onreported profits,corporate taxes havenot risen in proportion to economicprofits.Reported profits have grownmore slowly because of the greater useof accelerated depreciation,and becauseinflation profits have declined with themore moderate rate of price increase.  \n# Profit Measures\n\nThe fundamental difference betweenreported and economic profits is on thecost side;measuring expenses is pro-blematic when prices are not stable.Reported profits distort business per-formance during periods of sharp pricechanges,because conventional account-ing practices record business transac-tions at original,or historical,costs.  \n1.Reported profits in the NIPA exclude capitalgains and losses and adjust for a few other minorrevenue and cost items,which are reported to theIRS.See Bruce T.Grimm,\"Domestic Nonfinan-cial Corporate Profits,\"Survey ofCurrent Busi-ness,U.S.Department of Commerce,Bureau ofEconomic Analysis,vol.62,no.1(January 1982),pp.30-31.  \n# How Good AreCorporateEarnings?\n\nby Paul R.Watro  \nBusiness operations require thatsome assets be held for a relatively longtime.Due to lags in acquiring raw ma-terials and producing and selling pro-ducts,goods are held in process,or in-ventory,for long periods.Inflationincreases the final sale prices of theseproducts,but does not alter their cost,which may be measured in prices thatprevailed when raw materials,inter-mediate goods,and finished goods en-tered inventory.Consequently,report-ed profits generally are biased upwardby inventories being held during peri-odsof inflation—at least under thefirst-in-first-out(FIFO)method of figur-ing inventory costs for income taxes.2  \nAnother problem with interpretingreported profits stems from deprecia-tion expenses.Production and salesrequire the service of fixed assets suchas building","cbCaifYKA4FNIQAv","https://ap.wps.com/l/cbCaifYKA4FNIQAv","pdf",1365612,"English","# Profit Measures\n## How Good Are Corporate Earnings?\n### Fundamental difference between reported and economic profits\n### Inventory inflation bias and depreciation problems","[{\"question\":\"Why can corporate earnings look weak or strong depending on the measure?\",\"answer\":\"Reported profits and economic profits rely on different accounting treatments. Reported profits reflect historical cost expense measurement and tax reporting, while economic profits adjust for price changes and depreciation on a replacement-cost basis.\"},{\"question\":\"What is the key cost-side difference between reported and economic profits?\",\"answer\":\"Measuring expenses is problematic when prices are not stable. Reported profits use conventional accounting that records transactions at historical costs, which biases results during sharp price changes.\"},{\"question\":\"What factors explain the recent reduction in reported profit growth?\",\"answer\":\"Slowing inflation and changes in tax laws in 1981 account for much of the reduction. Reported profits also grow more slowly due to increased use of accelerated depreciation and the decline of inflation profits with more moderate price increases.\"}]","ECONOMICCOMMENTARY - Profit Measures - How Good Are Corporate Earnings? | PDF",1789960077]