U.S. corporate profits rebounded significantly in the third quarter as businesses reopened more broadly and demand accelerated from a pandemic-induced slump in the first half of the year.
The government’s first estimate of earnings for the period showed a record $495.3 billion annualized increase, or at a 27.1% annual rate, the Commerce Department’s report on gross domestic product showed Wednesday.
The improvement followed a 10.3% decrease in the April-June period and a 12% decline in the first quarter that was the biggest since the end of 2008.
The figures show both the magnitude and speed of the Covid-19 pandemic’s hit to the bottom lines of American businesses, and how companies’ fortunes reversed due to a surge in third-quarter demand. The improvement in profits help explain a stock market rally that saw the Dow Jones Industrial Average close above 30,000 on Tuesday. The economy expanded at an unrevised 33.1% annual rate from July through September.
The report also showed for the first time that gross domestic income, which measures all income earned in the production of goods and services, increased an annualized 25.5% in the third quarter after a record 32.6% plunge in the prior three months.
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