The numbers: Corporate profits rose again in the fourth quarter to cap off a big increase in 2021 despite widespread supply and labor shortages that raised costs and contributed to high inflation.
Adjusted pretax profits rose 0.7% to an annualized $2.94 trillion in the final three months of last year from $2.92 trillion in the third quarter, the government said Wednesday.
For the full year, adjusted profits leaped 25% to a record high. Earning fell in 2020 after the onset of the pandemic, marking the first decline in five years.
The profit figures were released as part of the third and final regular update to gross domestic product for the fourth quarter. GDP rose a revised 6.9% in the fourth quarter, down a tick from the prior estimate of 7%.
Big picture: The U.S. economy’s rapid recovery from the pandemic has padded the profits of most businesses, especially large ones that were better shielded from the effects of the virus.
Although companies are paying higher costs, they’ve still managed to increase profits. Aa result, they have more money to invest and can afford to pay workers more.
The government is getting in on the action, too. Federal tax receipts soared to a record in fiscal 2021 and are on track this year to set a fresh all-time high, based on early tax data.
Key details: Consumer spending rose a revised 2.5% in the fourth quarter, updated GDP figures show. Previously the increase was reported as 3.1%.
Business investment and the increase in inventories were somewhat stronger than previously reported, however.
Most other figures in the GDP report were little changed.
The economy grew at a 5.7% pace in 2021, recovering from a steep 3.4% drop in 2020.
Market reaction: The Dow Jones Industrial Average
and S&P 500
were set to open lower in Wednesday trades. Stocks have rallied in the past week after slumping in the early days of the Russian invasion of Ukraine.