From: Allin Cottrell (cottrell@wfu.edu)
Date: Thu May 20 2004 - 08:56:48 EDT
On Thu, 20 May 2004, Rakesh Bhandari wrote:
> The profit surge also coincides with the post 2002 depreciation of
> the dollar, almost 30% against the euro though only 12% against a
> trade weighted basket of currencies...
Yes. Another perspective on the course of profits is the Kaleckian
identity:
profit = investment + budget deficit + net exports - workers' saving
From this point of view, comparing 2003:4 with the previous profit
peak in 1997:3, we have (all in current billions of dollars):
1997:3 2003:4 change
fixed private investment 1347.0 1756.0 +409.0
federal deficit 35.0 417.9 +382.9
These both boost profit, as does a fall in personal saving of 63.9.
Over the same period the U.S. current account balance has fallen by
97.6, a relatively slight offset to the big boost from private
investment and federal deficit spending.
Allin.
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