Recent Revisions to Corporate Profits: What We Know and When We Knew It

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Current Issues in Economics and Finance

Recent Revisions to Corporate Profits: What We Know and When We Knew It

March 2004 Volume 10, Number 3

JEL classification: G10, E20

Authors: Charles P.Himmelberg, James M.Mahoney, April Bang, and Brian Chernoff

Initial estimates in the National Income and Product Accounts significantly overstated U.S. corporate profits for the 1998-2000 period. Subsequent revisions reveal that the profitability of the nation's corporate sector in the late 1990s was substantially weaker than "real-time" data indicated. An unexpected surge in employee stock options exercised—and perhaps, in some sectors, firms' inflated statements of profit—may help explain the large downward revisions.

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7 pages / 134 kb

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