Corporate Profits Not Actually At Record High

I saw a lot of commentary yesterday about how corporate profits are now at a record high. I think it's worth noting that this is true if and only if you don't adjust for inflation. And I have no idea why you would think adjusting for inflation is a bad idea in this context. A helpful chart the Commerce Department emailed out yesterday illustrates what's actually happening:

The major takeaways from this chart are twofold. One, corporate profits aren't really at a record high. Two, corporate profits hit new highs all the time in an expanding economy. The real story here isn't that nominal profits are at a record high, it's that real profits are still below-peak. Which is just to say that corporate profits, like most everything else, reflect incomplete recovery from the recession. The good news here is that the trends are in the right direction. Profits are rising. Capital expenditures are rising. And the non-financial sector is beginning to back away from stockpiling liquid assets:

This all points to things being better 12 months from now than they are today.